A dynamic business,
a dynamic future

Annual Report

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Financial Highlights

We have placed a strong emphasis on reviewing and optimizing our balance sheet and cash flow generation

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Financial Highlights

Highlights 2019

Total Sales (SAR million)
Net Profit* (SAR million)
Operating Cash Flow (SAR million)
Free Cash Flow (SAR million)
CAPEX (SAR million)
Total Headcount

* Profit attributable to the Shareholders of the Group


2019 at a glance

Over the past year, we focused on building a ‘dynamic’ future for the business

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Almarai’s management and staff focused on building a dynamic future for the business.
As at 31 December 2019, Almarai’s paid up share capital amounted to
SAR 10 billion, consisting of 1 billion fully paid and issued shares of SAR 10.00 each.

Founded in 1977, Almarai Company is the world’s largest vertically integrated dairy company and the region’s largest food and beverage manufacturing and distribution company.

Headquartered in the Kingdom of Saudi Arabia, Almarai is ranked as the number one (FMCG) Fast Moving Consumer Goods brand in the (MENA) Middle East and North Africa region and is the market leader in most of its categories across the Gulf Cooperation Council (GCC).

After more than 40 years of sustainable growth, Almarai continues to provide nutritious and healthy products to consumers of all ages, with success derived from the bedrock principle of ‘Quality you can trust’. In addition to its high-quality dairy products, Almarai has diversified its product portfolio to include juices, bakery, poultry and infant formula under the brand names Almarai, L’usine, 7days, Alyoum and Nuralac. Meanwhile, the Company operates successful joint ventures with Chipita and PepsiCo.

Our purpose

Our purpose is simple: to deliver on our promise of ‘Quality you can trust’. Our commitment to the people and consumers of the Middle East is unwavering. We will continue to deliver nutritious and high-quality food and beverages across the markets in which we operate and grow.

Revenue segmentation

Sales by geography
Sales by product

Awards and recognition

Where we are

What we do


Dairy is the cornerstone of Almarai’s range, including Fresh Dairy, Long Life Dairy and Dairy Foods. We have earned the trust of our consumers for more than 40 years and are the regional market leader in a wide range of sub-categories. New product launches in 2019 included Mango-flavoured set yoghurt, Blueberry-flavoured Greek yoghurt, Date-flavoured milk, and 2.2l fresh milk bottles. We have also implemented a facelift of our butter packaging and expanded the range of food services.


We deliver a wide range of bakery products to consumers across the GCC, marketed under the L’usine and 7Days brands. From bread and snacks to cupcakes, Almarai provides consumers with exciting and innovative treats. In 2019, we launched Coconut Swiss Roll, Red Velvet Muffin, Bran Cream Cheese Sandwich, and Zatar cream cheese sandwich.


Almarai is the GCC leader in fresh juice, offering consumers a range of juices, nectars and drinks, as well as products for children. Over the last year, Almarai has been expanding its footprint into other lucrative areas of the juice market including premium not-from-concentrate juice, super fruit and everyday segment carton juices with the Joosy Life product range.

Infant Nutrition

Almarai’s Infant Nutrition products are available across Saudi Arabia and other markets in Middle East and Asia. Our brands include Nuralac and other brands in export markets.


Alyoum is regarded by the market as synonymous with quality and innovation – that’s why it is the brand of choice for over 35.0% of Saudi Arabia’s fresh poultry consumers. The product range includes a comprehensive selection of whole, part and value-added SKUs under the Alyoum and Albashayer brands. In 2019, two versions of our new Oven Ready Chicken product were launched on a test-market basis.



In 2019, we focused on building a dynamism that has strengthened its ability to overcome challenges and seize the opportunities available to it

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Sultan bin Mohammed bin Saud Al Kabeer


On behalf of the Board of Directors, it is my pleasure to introduce Almarai’s 2019 Annual Report. Over the past year the Company has built on its dynamism, strengthening its ability to overcome challenges and seize the opportunities available to it. We are in an exciting phase of the 2025 journey, and the pages that follow will provide a clear picture of the achievements we have delivered in the last twelve months.

Our operating environment

The global economy remains a challenging environment to do business, with headwinds for trade putting pressure on growth around the world. The MENA and GCC regions are not immune to these difficulties, making it incumbent on a business of Almarai’s size and sophistication to remain strategically agile. Cost pressures in our home market of Saudi Arabia – and in the wider region – continue to weigh on growth in the Food & Beverage sector, while shifting consumer behaviours require innovation to maintain a competitive advantage.

Short term GDP forecasts for MENA are mostly modest, as oil-importing economies seek to manage down the pressure of high public debt while stimulating private sector growth. Oil-exporting countries continue to pursue diversification, which will attract foreign direct investment and generate better productivity. After a record national budget in 2019, Saudi Arabia continues to forge ahead with the ambitious Vision 2030 programme and this year will host the G20 summit for the first time – an exciting milestone for the Kingdom’s increasingly prominent place on the world stage.

A sustainable business

In our mission to build a genuinely sustainable business, we have reformulated our sustainability framework, which now focuses on three key pillars, having previously comprised six. The pillars address the issues that matter most to us: caring for people, protecting the planet, and producing responsible products. With this framework in mind, we are confident that the impact of our business on the world around it will be positive – and supportive of our long term viability.

Highlights in 2019 included our ongoing commitment to supporting the national labor force, which saw another cohort of talented graduates join Almarai as part of the Future Leaders and Graduate Professional Trainee programmes, with more graduating from the Company’s Dairy & Food Polytechnic. We are proud to say that we now employ more than 8,500 Saudi nationals. Meanwhile, we are securing the future of the business by sending a growing number of senior executives to international business schools, preparing them for succession to some of the Company’s most senior roles.

Another major achievement for the year was the completion of the Al Kharj Solar Project – the largest renewable energy installation of its type within the private sector in Saudi Arabia. The facility will reduce the fuel and energy consumption of our manufacturing plants, mitigating our environmental impact by offsetting 8,100 tons of CO2 per year, which is equivalent to planting 8,000 trees. Having already secured 100% of our alfalfa supplies through our overseas farming operations - this is another important step in our efforts to meaningfully reduce our impact on the natural environment.

In keeping with our commitment to ‘Quality you can trust’, and the delivery of first-class products, the integrity of our quality assurance systems is independently evaluated by globally recognized certification bodies. With our facilities already certified for ISO 22000 Food Safety Management and ISO 9001 Quality Management, in 2019 our Infant Nutrition and Poultry processing plants were honoured with the FSSC 22000 award, the Global Food Safety Initiative (GFSI) recognized scheme, with other sites under review for certification.


In 2019, the Board continued to diligently perform its fiduciary responsibilities. In May, it approved the Company’s five year business plan for 2020-2024, completing the second milestone review of the 2025 strategy; and in August, following the Company’s Extraordinary General Meeting, shareholders approved the appointment of myself as Chairman, Mr. Suliman bin Abdulgader Al Muhaideb as Vice Chairman, and the formation of a new Board and its committees for the next three-year term.

Value for our shareholders

Almarai’s total market capitalization as at 31 December 2019 was SAR 49.5 billion, with 1 billion shares in issue. At the forthcoming Annual General Meeting on 5 April 2020 the Board of Directors will propose a cash distribution of SAR 850 million, equivalent to SAR 0.85 per share or 46.9% of audited Net Income.

Our gratitude to stakeholders

My gratitude is due to members of the Board of Directors, for the guidance and support that they provide to management, as well as their commitment to representing the interests of our shareholders. I would also like to record my heartfelt thanks to the Company’s management and employees, whose unwavering dedication to our strategy continues to yield fruit for shareholders and consumers alike. On behalf of Almarai, I would like to thank our consumers, shareholders and quality makers who work diligently each and every day to ensure the Company’s success. The continued trust in our business and products demonstrates the quality we have become accustomed to delivering. Expectations are high, and we remain wholeheartedly committed to meeting them and build on that good work through the rest of 2020 and beyond.

Majed Nofal

Chief Executive Officer

On 1st January 2020, it was my privilege to be appointed to the role of CEO at Almarai, where we are building a dynamic future. After a challenging period for the sector and the business, we can be confident in our claim to put the Company back on its path for growth, and we have every reason to look forward to realizing more optimistic outcomes in the year ahead.

Highlights of 2019

The Group’s Net Income for 2019 was SAR 1,812 million, decreasing by 10% from SAR 2,012 million in 2018. Net Revenues improved by 5.9% to reach SAR 14,351 million. Our core GCC markets benefitted from stabilization after a period of volatility, with Saudi Arabia returning to growth and other markets improving gradually. Total fresh milk production in Saudi Arabia has been balanced by higher market growth, which is resulting in generally lower discounting for Dairy products – a positive development for Almarai.

While operating margins remain under pressure due to higher input costs, in part driven by overseas sourcing of animal feed requirements, increased labor expenses and higher cost of funding, Almarai continued to focus on controlling input expenses, reducing both OPEX and CAPEX, and improving Free Cash Flow. Meanwhile, the diversification of the business has been critical for supporting its return to top-line growth. Poultry continued to perform strongly, as did the burgeoning Foodservice channel, while revenue growth has been resurgent across geographies – improving by 6.1% in Saudi Arabia, 2.4% in the GCC and by 12.6% in other MENA markets.

The product innovation pipeline remained healthy, with over 24 new SKUs (Stock Keeping Unit) introduced to the market in 2019. What is most promising about the pipeline is that it is proving effective across categories, from new or updated Dairy flavors through to a growing range of premium Juice options, innovative and market-savvy Bakery products, and value-added Poultry options – including oven-ready whole chickens.

In February, we were pleased to announce the 100% acquisition of Premier Foods, a manufacturer of meat and poultry products for the hospitality and catering sector. This important growth initiative adds tangible value to our Foodservice business and is a demonstration of our commitment to developing channels that will broaden and strengthen our value proposition. Later in the year we announced another strategic acquisition, increasing our stake in the Pure Breed Company to 93.5%. The acquisition bolsters Almarai’s supply of poultry parent stock, deepening the vertical integration of our Poultry operation.

A dynamic business, a dynamic future

As the momentum and dynamism of the Saudi economy gathers pace, so does that of Almarai. In the course of the year, we proved adept at navigating headwinds and creating our own opportunities. While we have continued to work on enhancing our efficiencies, we have focused on working smarter and making our business more agile.Sustainability also plays a key role in building for our future and long term growth prospects. We have refined our sustainability framework down from six core pillars to three to refocus our efforts on the issues that matter most to us. In essence, we have created a platform that will enable greater dynamism and, ultimately, the delivery of the ambitions of Almarai 2025.

The impact of the process is apparent across the business – including in our non-core markets of Egypt and Jordan, where we are now achieving profitable performance. At the same time, we are listening carefully to the market, so we know exactly where we need to scale-up our efforts. This approach is most apparent for Foodservice and the diversification of our retail product range into both value and premium categories. While sectoral challenges continue to impact all industry players – especially in relation to sugar taxation – it is our responsibility to maneuver our business to adapt to societal change. We are already known for the quality of our products – so the next phase in our mission to achieve dynamism will be to make ourselves attractive to younger demographics, while growing our foothold in the health and wellness space.

Committed to our people

We have a reputation for developing talent and harnessing the power of an engaged workforce. Our commitment to people is aligned with our own strategic vision and that of the Kingdom itself – from the creation of career opportunities to building a dynamic working environment. With over 42,000 full-time staff across MENA we are an immensely diverse organization employing 65 different nationalities. We are proud to say that we now employ more than 8,500 Saudi nationals. Of this cohort, 1,709 were hired as recent graduates in 2019 comprising of 1,582 Saudi men and 127 Saudi women. We remain wholeheartedly committed to the Saudization goals outlined in the 2030 Vision for Saudi Arabia, and we will continue to pursue this through 2020 and beyond.

Hiring is one thing, but engagement and development is another. An area of significant investment has been in succession planning and associated training, to build a leadership team that truly represents the next generation for the Company. Future leaders are engaged in a rigorous development and evaluation programme – including both internal and external training modules. At the same time we are enhancing our engagement methods to better enfranchise colleagues and respond to their requirements on a real-time basis, through the ‘We at Almarai’ initiative. More details can be found later in this report.

Almarai 2025

With the Board having approved the latest phase of our five year strategic plan, our strategy is focused on achieving full potential in core markets, while boosting the performance of non-core or underperforming business units and developing high-potential new segments. To this end, we can be very satisfied with our progress to-date as borne out in particular by the continued success of our Poultry business, profitability in Egypt and Jordan, and the rapid growth of our Foodservice offering.

Looking to 2020 and the years that follow, we will sustain our focus on cost reduction and the optimization of our assets, more impactful innovation and marketing, improvements in our operating model, talent acquisition and retention, organic and inorganic growth projects, and the roll-out of new technologies – with a focus on digitization.

With thanks

On behalf of the entire Company, I would like to place on record our heartfelt thanks to my predecessor as CEO, Georges Schorderet, who retired after a career filled with achievements and generosity. Georges’ stewardship of the Company has been an inspiration to us all.

I would like to express gratitude to my colleagues for their loyalty and considerable efforts, and on behalf of the Company to thank both the Board of Directors and our shareholders for their support. We continue to welcome their guidance and feedback. Perhaps most importantly, the thanks of all at Almarai are owed to our consumers, to whom our promise is the continued production of products that enrich their lives.

Paul-Louis Gay

Chief Financial Officer

Although Almarai faced sustained top-line pressure, a key theme in 2019 was the return to growth of our core categories and geographies without compromising on a strategy for margin defence, with healthy margins restored in non-core categories and acceleration of the emergence of the Foodservice channel bearing fruit. As the Company came to the end of its latest investment cycle, we have placed a strong emphasis on reviewing and optimizing our balance sheet and cash flow generation.

Performance highlights

With top-line growth positive during the year, ongoing cost challenges meant that operating performance was fairly flat with EBITDA of SAR 4,013 million as compared to SAR 4,012 million a drop in EBITDA margin of -1.7%pp at 28.0%. The Dairy, Poultry and Bakery segments were the main drivers for top-line growth of 5.9%, while Juice performance was poor as a consequence of a contracting market. Growth in the Foodservice channel has been important for supporting growth across segments.

Gross profit for the Group increased by 0.7% to SAR 5,367 million, with revenue growth offset by higher operating costs resulting from increased alfalfa imports and expenses associated with labor reform in Saudi Arabia. Selling and distribution expenses rose by 9.0% on the back of expansion in the Foodservice channel and higher marketing and trade support expenses across segments. Notwithstanding of our ongoing cost efficiency programme, general and administration expenses increased by 6.7% to SAR 400 million.

Focus on deleveraging

With net debt levels stable, financing costs increased by SAR 114 million, due to higher interest rates earlier in the year, the accounting treatment of the perpetual Sukuk profit payment against equity and the lower capitalization of funding costs for qualified projects. As Almarai has come to the end of its investment cycle and achieved improved top-line performance, free cash flow generation more than double to record and increased of 113.8% to reach SAR 2,602 million CFO’s review 20 Almarai Annual Report 2019 at year-end, as compared with SAR 1,217 million in 2018.

The Net Debt/EBITDA ratio stands at 3.2 at year-end, within the strategic limit set by the Board, and the net debt to equity ratio reached 83%, below the 100% target. The strategic direction remains to de-lever the company towards a net debt to EBITDA ratio of between 2.75 to 2.50 times, and the current trends of lower capital investment requirements, stable working capital and growing operating cash flow are likely to help us achieve this target within 18 months.

Managing risk

During 2019, the maturity profile of existing debt facilities reduced from 4.2 years to 4.1 years, and we will continue to review and consolidate the debt profile to ensure alignment of maturities with free cash flow expectations. With an established interest rate hedging programme and a high percentage of debt on fixed interest rate terms, Almarai was well-insulated from unfavourable interest rate conditions early in 2019, while volatile currency risk was managed by minimal Foreign Exchange rates exposure in Egypt and Argentina. During the year, Almarai consolidated its commodities hedging for inputs including corn, soybean and sugar, with a robust framework in place for protecting the business against price volatility. The commodity hedging programme has also been expanded to provide cover for plastics used in packaging.

At governance level, an important priority in 2019 was the work of the Risk Committee, with an Enterprise Risk Management (ERM) function established, along with a series of initiatives aimed at better structuring the Company’s approach to risk. These included new and improved versions of Almarai’s risk registers, risk maps, associated compliance and response measures, and policies for employees Code of Conduct recognition, conflict of interests declaration and whistleblowing system and processes – to aligning the Company with international best practice standards.

Efficiency and optimization

With significant cost increases endured during the last three years, we have so far been successful in partially offsetting the effect by strict margin and cost management measures. Increased operating costs are now ‘here to stay’, in response to which Almarai is attempting to redefine its operating model both for support and go-tomarket functions, which consume significant resource – especially human capital expenditures. Meanwhile, we are making extensive efforts to optimize sales activities in order to make Almarai more relevant to market developments – for example, the rise of the Foodservice segment, digitalization of channels, and opportunities in new geographies. These developments have created a need for a more proactive and agile business that exploits new technologies and addresses new consumer trends – both of which factors remain a high priority for management.

The year ahead

Almarai has maintained a healthy credit profile with local lenders – as well as with international fixed income investors – as a consequence of predictable and positive operating cash flows and a clearly defined path for sustainable top-line growth. At year-end, unutilized bank facilities and available government funding totalled SAR 8,780.2 million, and with a constant need to finance operations and potential future investments, Almarai will continue to diligently review opportunities for cost efficient borrowing facilities and solutions.

As in 2019, the achievement of efficiencies and optimization in 2020 will remain a top priority, as we seek to tap the growth opportunities identified by our strategy and to deliver on an improved operating model. To achieve these objectives, we are strengthening the quality of our team, developing capabilities and careers at all levels, and putting an ever-stronger focus on succession planning and management skills improvement.



To deliver on our strategic objectives, we have established where we will operate, how we will win and what the results of our strategy will be

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To deliver on our strategic objectives, we have established where we will operate, how we will win and what the results of our strategy will be. In essence, our objectives are to realize our full potential in core GCC markets, turn around non-core businesses, and develop high-potential new businesses. The key drivers of the strategy are:

  1. Strong focus on cost reduction and asset optimization
  2. Increased investment in innovation and marketing
  3. Continued refinements to our operating model
  4. Expansion into new growth areas, organically and via acquisition
  5. Technology enhancements, with a focus on digitization

Where to play

Focus on GCC core full potential
  • Core full potential in Saudi Arabia
  • Leadership in UAE
  • Optimized pricing strategy
Turnaround/divest non-core businesses
  • Infant Nutrition
  • IDJ (International Dairy & Juice)
Seed high-potential new business
  • Dedicated food service division
  • Evaluate and selectively enter new product categories

How to win

Lean costs & assets
  • Cost reduction
  • Asset optimization
Operating model & talent
  • Role of centre
  • Superstructure
  • Governance
  • Ways of working
  • Resources
  • Saudization
  • Succession plan
Innovation & marketing
  • Trend monitoring
  • Increased speed and quality of adaption (time to market)
  • Brand architecture
Technology (digital & IT)
  • E-commerce and engagement
  • Complete transition of legacy systems
  • Acquistion to support development of core businesses
  • Strategic acquistions to enter categories or countries


  • ~1.5x market growth
  • New adjacencies revenue share ~30%
  • RONA > WACC +2%
  • Top quartile employee satisfaction
  • Preferred consumer brand

Case study: Fondomonte Farms

The challenge

In 2014, the Saudi government decreed that by 2018, all local green fodder production for the purpose of herd consumption would be stopped, in an effort to preserve the Kingdom’s precious water resources.

The strategy

In response, Almarai established a five year strategic plan to build a supply chain to ensure the reliable procurement of animal feed, while supporting the government’s environmental mission. The Company established strategic supply centres around the world, to produce and manage the continuous availability of green fodder for its herds.

The objective was to produce 40% of Almarai’s high-grade alfalfa requirements on its own arable farms, with 60% procured, to guarantee the inputs required for the dairy herd to run at maximum productivity.

Each of the three supply centres has been established in a different geographic location (USA in February 2014, Argentina in January 2015, and Romania in 2019), each supplying 20-40% of the total requirement, with the capacity to increase production in case of interruption elsewhere

The result

Today, Almarai procures 100% of its alfalfa requirements internally and from overseas.

The most recently established farming venture – Maria Fondomonte in Romania – received Board approval to proceed as a strategic alliance with Maria Group in February 2019.


Business Model

Our business model is structured to deliver on the promise of ‘Quality you can trust’.

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Our business model is structured to deliver on the promise of ‘Quality you can trust’. It is tailored to our commitment to ongoing improvement and exists as a guiding force for operations across the Company. The business model enables management and staff to work in accordance with a clearly defined operating framework. It facilitates the practical application of a working culture that has efficient and effective process management at its heart.


Adding Value

Business Unit Structure:
  • Almarai transitioned from a functional structure to business unit model
  • Management focus on end-to-end sales, profitability and return on net operating assets (RONOA) for each category
  • All business units served by Sales, Distribution and Logistics, Procurement and other corporate functions
  • Exports team to grow opportunities for sales across GCC and beyond (worldwide) corporate functions

How we do it

Animals consume highest quality feed

Almarai imports 100% of its yearly green fodder requirements through its overseas arable operations

Dairy herds and poultry flock have 24 - hour veterinary care

Temperature controlled housing

Highly nutritious feed

Ensures maximum yield and first-class end product

Cutting-edge technology to mass-produce nutritious products while reducing costs (Manufacturing 4.0)

Continuous facilities expansion and renovation

Meeting growing demand

Transport and Logistics division larger than any logistics company in the Middle East

9,069 vehicles deliver 2 billion kg of product on time and in perfect condition

Earned the trust of consumers to become the trusted brand across the Middle East

Ongoing feedback process for maintaining quality and consumer satisfaction

Commitment to innovation is a core value

Innovation underwrites the Almarai quality culture

Digitalization of production and automation of business processes

Innovation in our DNA Consumer insights and powerful branding Exceptional transport and logistics Best-in-class manufacturing Extraordinary care for farm animals Crop cultivation and selection


Commitment to Quality

Quality you can trust is in our DNA

The Almarai Quality 4.0 Programme covers process, people and technology, unifying the quality architecture across the Group

Core values (ASPIRE) are directly connected to our world-class quality management system

Almarai Innovation

Stage-gate innovation management process captures product ideas and managing them to final launch

200+ projects in pipeline meet new consumers trends and maximize operational efficiency


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