Almarai’s Q1 earnings in line with estimates: Al Rajhi Cap

Almarai Co’s first-quarter 2019 net profit of SAR 336 million was broadly in line with Al Rajhi Capital’s estimates of SAR 346 million, the brokerage said in an earnings review on Wednesday.

“Weakness in GCC markets, particularly decline in juice business revenues and higher alfalfa cost negatively impacted the revenue growth and gross margins,” it noted.

Revenue increased 3.8 percent year-on-year (YoY) to SAR3.35 billion matching the brokerage’s estimates of SAR 3.33 billion, driven by solid performance from poultry and bakery segment while the company’s largest dairy and juice segment continued to suffer.

Gross profit declined 3.6 percent YoY to SAR1.21 billion due to higher alfalfa and feed costs.

"Almarai should continue to gain more market share in Saudi Arabia given the leading position in the dairy industry and also capture more market share in the poultry," the report said.

Besides, the company has a strong balance sheet that enables it to look for potential M&As, driving synergies, it added.

Al Rajhi Capital maintained its “neutral” rating on the company, setting the target price at  SAR 51 a share.