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Annual Report 2021

At a glance
Operating Review
People & Culture
Financial Statements

CFO's Review

Danko Maras


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Almarai delivered topline growth and addressed profitability for the year, achieving a solid overall performance despite the challenging operating environment and increasing costs having a material impact on our results. With growth in the majority of our markets and all our segments in Q4, as trading conditions normalized towards year-end, we are in a strong position to build on this positive momentum and capitalize on opportunities heading into 2022.

Rising revenues and effective cost management

Revenues for the year were SAR 15,850 million, up 3% from SAR 15,357 million in the previous year. Topline growth in our GCC markets was adverse due to the base year effect of higher food purchases in 2020, due to COVID-19 related movement restrictions. However, robust growth in our Egypt and Jordan consumer markets, as well as higher alfalfa sales as part of our de-stocking program, helped to deliver the positive overall topline growth at Group level.

Operating profit was significantly impacted by a substantial increase in cost inflation for global dairy and farm commodities, resulting in nearly SAR 420 million of additional cost during 2021, as well as the shift towards a more market driven supply chain structure driven by a reduction in subsidies of SAR 157 million. Whilst Almarai was able to mitigate the impact by effectively controlling operating cost, operating profit for the year dropped by 20% to SAR 2,015 million, while gross profit also decreased to SAR 5,059 million in 2021.

Almarai’s net income attributable to shareholders of the Company of SAR 1,564 million, down 21% year on year as a result of these cost and regulatory headwinds, was supported by a significant reduction in funding costs. Financing costs for the Group decreased by SAR 150 million due to a lower net debt level, as well as lower funding rates driven by favorable market conditions throughout the year and effective rate management.

Record free cash flow and balance sheet strength

Despite the challenges faced on the profitability front, the Group fared well in cashflow generation, with net cash generated from operating activities of SAR 4,915 million, an increase of 17% from 2020. This was largely the result of stable business performance and improved working capital management, mainly for inventory and vendor management.

Net cash used in investment activities reached SAR 1,814 million in 2021 against SAR 1,373 million for 2020, adjusted for time deposit redemption of SAR 585 million. The investing activities resulted in slightly higher investment compared to last year, due to acquisition of Binghatti Manufacturing facility in the UAE.

The positive free cashflow of SAR 3,101 million for 2021, an increase of SAR 271 million compared to 2020, was the highest ever free cashflow generated in Almarai history. Representing 20% of the net revenue, also a record achievement, the positive free cashflow was driven by improved working capital management and stable operating performance.

Segmental results

The Dairy and Juice segment recorded 2% growth over 2020, driven by strong performance in long-life dairy segment, which grew by 7% year on year. This was followed by fresh Dairy and Fresh Juice segments, which both recorded growth. The only exception to growth was the Foods segment, which reported a decline of 8% due to base year effect of one-off purchases done during COVID-19 related restrictions in 2020. The Dairy and Juice segment posted 18% lower net profit attributable to the shareholders of the company for the year, due to usage of 100% imported alfalfa, higher commodity costs and a lower subsidy.

The Bakery segment accelerated growth in the second half of the year, as schools were partially opened after summer break. The volume growth in the second half was further supported by positive product mix of single serve, resulting in 4% growth for the full year.

The Poultry segment delivered slightly positive full-year revenue, as pricing adjustments across the category helped overcome unfavorable channel mix due to opening of hotels and restaurants during the year. However, net profit for the Poultry segment decreased by 37% due to reduction in subsidy and higher feed commodity costs.

Geographic results

Accounting for 65% value share of Almarai sales at a country level, Saudi Arabia remains the major contributor for sales of the Group. Full year revenue in the Kingdom dropped by 1% to SAR 10,223 million for 2021.

The UAE was the second-largest market for Almarai, representing 9% of its total sales, at SAR 1,381 million, also down 1% compared to 2020.

The slight drop in these core markets was offset by significant growth in non-GCC countries, which increased 34% overall in 2021. This positive result was driven mainly by growth in Egypt (+29%), Jordan (+39%) and exports (+69%) for the year.