Halwani Bros rules out price hikes, seeks to maintain market share

Halwani Bros Co., one of Saudi Arabia’s largest food producers, will not increase the prices of its products in the local market, chief executive Saleh Al Hefni told Argaam.

The Saudi-listed company will continue offering discounts to maintain its market share amid fierce competition, he added.

“The company offers around 400 products in the local market at different discounts,” Al Hefni said.

Halwani Bros’ profit margins in Q2 2018 were impacted by higher cost of sales, driven by a 30 percent increase in prices of sesame – one of the company’s raw materials.

Moreover, the food producer had to offer several promotions and discounts as competition intensified in the sector. This further weighed on profit margins.

As most of the Kingdom’s commercial sectors grapple with lower profit margins, prices of food and consumer goods have also declined, Al Hefni said, noting that the level of discounts currently being offered in the Saudi market is unprecedented.

Nevertheless, the market has managed to absorb several economic shocks that took place last year and earlier this year, the CEO said.

Looking ahead, Al Hefni said he expects the second half of the year to be more stable, even amid the expatriate exodus.

Halwani reported a 23 percent profit decline year-on-year (YoY) to SAR 25 million in H1 2018. The drop was attributed to higher cost of goods sold and discounts offered in both Saudi Arabia and Egypt.

Net profit for the second quarter fell 30 percent YoY to SAR 8.5 million, hurt by higher sales and distribution expenses. 

Geographically, the company saw higher sales from the Saudi market compared to Egypt, due to subsidy cuts and the rise of energy prices in the North African nation, Al Hefni said.

“We raised the prices of our products in the Egyptian market earlier in August. We expect this increase would help maintain the company’s profitability this year,” he explained.