Delivering Value For Our Stakeholders
Almarai continued to deliver on promises to our stakeholders and grow with confidence during 2022, capitalizing on opportunities to expand and diversify our business to bring exceptional quality and variety to Consumers across our markets.
Almarai‘s pledge to increase robust financial returns and shareholder value is matched by our ongoing collaboration with all stakeholders in building a better future for all. This approach is the foundation of our corporate strategy, operational excellence, and outstanding performance.
A successful 2022 again demonstrated our strength, capabilities, and resilience in the face of continued market challenges and growing competition.
We demonstrated how- underpinned by our commitment to growth and responsibility to all stakeholders - we successfully leveraged our scale and capabilities, enabling us to maneuver through challenging times.
Supply chain disruptions and commodity price increases continued throughout the year, but we were able to forecast and mitigate risks. Importantly, we have once again validated the trust our stakeholders have in us, ensuring supply and food security continuity while also delivering solid top and bottom-line growth.
Consumers are at the center of everything we do, and we remain steadfast in our dedication to providing them with the quality they expect and trust.
Progressing our strategy
Growth in 2022 was driven more by volume and careful selection of product mix and channels. A particular focus on risk mitigation and forecasting helped us deliver industry-leading growth.
Consumer behavior began normalizing in 2022 after significant disruptions in the preceding years from COVID-19. Across the board, the market re-opened: schools and workplaces resumed normal operations, and residents and tourists returned to restaurants and hotels. Volumes in the religious tourism sector also improved.
The resumption in activity supported growth in Foodservice, a strategically important vertical for Almarai, and we are proactively driving our expansion. In the year under review of Foodservice, there was growth in value and volume of 41% and 18% respectively, with annual revenue of SAR 2.9 billion.
We continue to make good progress on our existing pillars. As part of our commitment to double poultry supply by 2025, we invested in our first parent bird facility to build a homegrown poultry business in the Kingdom and further bolster national food security. There are potentially new land signings in the near future that will further this plan.
Innovation has always been a mainstay of our business as we continue to develop new products to delight our Customers and stay ahead of our competitors. This year we introduced new ready-to-drink cold coffees and iced teas, several plant-based protein milks for Consumers wanting dairy alternatives, and new Almarai Refresh products and carton juices.
We also embarked on our strategy to enter new food markets, representing a significant expansion for Almarai. We have commenced our development of a seafood business with an initial investment of SAR 252 million for a processing facility in the Kingdom.
We announced plans to enter the red meat market and secured a land agreement. This will support the development of a new division, brand, and facility.
With technology key to our future success, we continued to digitize our business, making it more efficient, improving how we serve and engage with our Customers. Digital channels increased, and we launched a new customer-centric website.
We developed our eCommerce presence, achieving good results and paving the way for further investment to strengthen our connections with our Consumers and Customers.
In line with our overall strategy to expand our operational footprint, we also expanded our wholesale business.
Financial performance in 2022
Despite the many challenges we faced in 2022, our strategic response and proactive expansion enabled us to post strong revenue of SAR 18.7 billion, a 18.1% increase on 2021’s revenue of SAR 15.8 billion.
Net income attributable to shareholders of the Company of SAR 1.8 billion was 12.6% higher than in the previous year, while operating profit of SAR 2.3 billion also showed healthy growth, up 13% on SAR 2.0 billion in 2021.
With EBITDA of SAR 3.9 billion, Almarai ended 2022 with net debt to EBITDA of 2.3x.
Achieving operational excellence
Although the restrictions around the global COVID-19 pandemic started lifting in 2022, new challenges emerged in the shape of much higher input costs, as well as supply chain and logistics issues. Nonetheless, we maintained our leadership in an increasingly competitive market.
Dairy, our core business and the most significant contributor to our volumes and financial performance, did not grow as an overall category in 2022. The lingering impact of the global pandemic continued to affect the entire dairy industry, leading to unprecedented commodity prices, a steep rise in freight charges, and supply chain disruptions.
Nonetheless, Almarai’s Dairy business unit exceeded key performance targets - despite higher input costs - by maintaining its focus on its GCC markets, strengthening its core categories, implementing efficiency initiatives, particularly in long life (UHT) milk, and making improvements in the portfolio mix.
Our market-leading Poultry range of fresh whole chickens and related value-added products delivered solid volume and margin increases. Investment in production, regional economic recovery, and the implementation of accelerated demand-generation strategies resulted in healthy growth in Retail and Foodservice, partially mitigating higher industry-wide input costs.
Our Bakery business performed exceptionally well in 2022, with revenues topping SAR 2 billion for the first time. This performance was helped by trading conditions returning to normal after COVID-19 restrictions eased. The resumption of travel and schools re-opening lifted demand for our higher margin single-serve products.
During the year, we acquired 100% of Bakemart UAE’s shares and Bakemart Bahrain’s shares, and secured an additional 25% stake in Modern Food Industries (MFI) from Almarai’s subsidiary, Western Bakeries Company, taking our shareholding to 100%.
We are particularly pleased with Bakemart, which is already profitable following an accelerated turnaround. Adding Bakemart to our stable of brands brings valuable knowledge, access to the UAE, and a new channel to supply frozen foods and other products to Foodservice.
The entire Beverages category faced market pressure from steep increases in operating costs. Our Beverages business unit, however, still grew ahead of the rest of the segment in 2022, increasing value share thanks to the consistent implementation of its strategy. This helped us retain and grow our lead in the fresh and concentrated juices category while avoiding a price war to secure volume growth.
New products, namely ready-to-drinks cold coffees, iced teas, non-dairy milk, and additional Almarai Refresh products, will help us grow our market share and revenue moving forward.
Supporting our People
We are particularly pleased that our ongoing efforts to enhancing the environment in which our people work achieved an improvement in our employee retention rate, which increased to 90% in 2022, from 88% in the previous year. This advance validates the measures taken in the year to strengthen our commitment to being an employer of choice.
We ended the year with a total workforce of 43,104 higher in part due to our acquisitions outside the Kingdom.
Once again, we made significant investments in training, with the Almarai Academy coordinating and delivering 76,855 learning hours to 3,250 employees.
We maintained our employee experience strategy of engaging with our people via various channels, while recognizing their contributions to our business success by offering various incentives and rewards.
Solidifying our market leading position
Our focus in the coming year will be to maintain and grow our leadership position in all our primary market segments in the Kingdom, while boosting demand for our products in other GCC countries where we have a footprint. We anticipate continued top and bottom-line growth and increases in volumes in 2023.
Moreover, our strategy to accelerate performance in under-indexed segments and target new ones will continue, supported by identifying attractive, profitable organic and inorganic opportunities, and investing in capacity and distribution. We will also pursue further efficiencies by recalibrating lower-performing segments and channels.
As always, we will consider new categories and products that appeal to our Consumers and can deliver volumes, revenue, and sustainable growth. Accordingly, this will see us focus on poultry, red meat, and aquaculture.
We are in an excellent position to expand further internationally, and will take necessary steps to support our ability to grow in our current and other markets.
Innovation will remain integral to our DNA as we pursue novel ways to serve Consumers better. In addition, we plan to continue digitizing our systems and processes to become more efficient.
Our performance in 2022 was once again a testament to the immense contribution of all our employees, who faced new challenges with resilience and agility.
Not forgetting our Customers, who are always at the center of every decision we make, without them, we would have no reason to exist. Their support and loyalty are priceless assets to Almarai.