Higher sales helped Saudi Arabia’s Almarai to post a marginal rise in first-quarter net profit on Sunday, though the Gulf’s largest dairy company warned of challenging market conditions in the face of the region’s economic slowdown.
Saudi companies are grappling with a protracted slump in oil prices that is putting government and consumer spending under pressure. One indicator of the latter is cash withdrawals from automated teller machines sinking 13 per cent year on year in February, according to official data.
Almarai made a profit of 308.5 million Saudi riyals in the three months to March 31, up from 306.5m riyals in the same period last year, against an average forecast of 302m riyals from five analysts polled by Reuters.
“Given the very competitive market conditions driven by the economic slowdown, the performance of the company has been relatively strong in its core segments,” the company said.
In another sign of the challenges facing the Saudi retail sector, Jarir Marketing, one of the kingdom’s largest retailers by market value, posted a 29.5 per cent drop in first-quarter net profit on falling sales, particularly for smartphones and other electronics.
For Almarai, sales remained strong, with a 13.6 per cent increase on the back of growth for its dairy and juice, bakery and poultry segments helping to maintain profit levels.
But the company said that the cost of sales rose faster than sales. It said in January that the government’s utility price increases and new crop-growing restrictions would increase costs by 500 million riyals in 2016.
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