CEO's
Message

Continuing Investment for a Stronger Future

Almarai’s commitment to continuous investment in its market-leading business is paving the way for new growth opportunities that will facilitate a stronger future. Applying the full force of our substantial expertise and financial resources is taking the Group, the 11th most prominent food and beverages company in the world, into additional food categories and geographic territories where it is delivering its trusted quality to new markets of consumers.

Our operational efficiency and continuing capital investment for future growth drove meaningful advances in both our top and bottom-line numbers in 2023, with the latter growing at a rate faster than our competitors.

Prudent Operational and Financial Management

Our achievements during 2023 took place against the backdrop of the economic recovery in our core markets, erasing much of the lasting impact of the COVID-19 pandemic. We benefited from a revival in tourism in Saudi Arabia and an increase in population, both playing a role in delivering higher sales in our Retail and Foodservice channels.

Our core consumer markets in the GCC region continue to go from strength to strength.

The most consequential external influence on our business, however, was the unprecedented inflation in the costs of many of our essential commodities, but mainly corn, soya and alfalfa. Prices of our key inputs rose steeply before stabilizing, albeit at historic heights. Our success in absorbing these inflationary costs affirmed the Group’s reputation for excellent financial management and its ability to deliver sustainable profit growth and shareholder value.

Financial Performance in 2023

Our relentless focus on delivering value to our customers across our entire product range enabled us to post revenue of SAR 19.6 billion, a 4.6% increase over SAR 18.7 billion in 2022.

Net income attributable to shareholders of the Company of SAR 2.0 billion was 16.4% higher than the previous year, while operating profit of SAR 2.7 billion also showed outstanding growth, up 18.3% on SAR 2.3 billion in 2022.

Better cost controls over sales, marketing and general and administrative expenses all contributed considerably towards our operating profit growth. However, net profit growth was affected by higher funding costs in line with a higher SAIBOR rate.

With EBITDA of SAR 4.4 billion, Almarai ended 2023 with net debt to EBITDA of 2.1x.

Market Support for Almarai’s Corporate Strategy and Execution

As part of our USD 2 billion Trust Certificate Issuance Program, we launched an extremely well-received Sukuk in July to raise USD 750 million in 10-year Sharia-compliant debt instruments. Market demand for our bonds exceeded availability by almost eight times, reaffirming the confidence of financial markets in our business strategy and financial execution strategy.

Progressing our Strategy

In line with our growing emphasis on delivery and investment-driven growth, we refined our existing corporate strategy for 2023 into three pillars: Mobilizing innovation to grow our core business, moving into adjacent products and expanding into neighboring geographies. Against the background of these discrete objectives, we embarked on several significant initiatives during the year under review while also effecting a solid financial performance and delivering meaningful growth in shareholder value.

As part of growing our core businesses, we expanded our coverage and reach in the GCC, boosting consumer experience by making our products more conveniently available. New fresh and frozen product lines were launched in our four main businesses, Dairy, Juice, Poultry and Bakery, with capacity in our Poultry business increasing materially. Underpinning our core business expansion was consumer preference for greater convenience and changing dietary preferences.

The outcome was meaningful growth across our existing Retail, Wholesale and eCommerce channels, with our Foodservice channel being our top performer. Our channel strategy was supported by a substantial marketing program and excellent shelf executions to ensure our brands remained top-of-mind among B2B customers and shoppers.

The second pillar of our growth strategy is moving into new product categories. In 2023, one of our biggest success stories has been the well-received launch of Seama, our premium-branded, omega 3-rich seafood line. We also advanced our plans for the red meat market, where we are currently a supplier of products to the agricultural industry rather than a supplier of quality food products to consumers. These two new initiatives are essential elements of one of Saudi Arabia’s food security goals, namely, to increase the consumption of quality protein in its citizens’ diets.

The third part of our three-pillar strategy is geographic expansion. In 2023, this took a significant step forward with Almarai’s purchase of partner PepsiCo’s 48% share in the food business IDJ, which primarily manufactures and distributes dairy and bakery products in Egypt and Jordan, and exports internationally. The transaction now gives Almarai complete control of the Company, creating a platform for us to expand strategically into the wider region.

Operational Highlights

Growth in our core Dairy and Food categories played a key role in improving the overall profitability of the business unit. Total Dairy revenue grew 4.6% to SAR 11.3 billion,

The economic recovery in our core markets continued the upward trajectory that emerged in 2022, enabling our Juice business unit to deliver a solid performance across our entire beverage portfolio in 2023. Our line of fresh juices reported excellent revenue growth, significantly contributing to the business unit’s overall profitability.

Bakery also performed exceptionally well in 2023, with revenues topping SAR 2.6 billion, thanks to substantial volume and value growth across the entire portfolio of products and supported by product innovation and manufacturing economies of scale.

Our flagship Poultry business had another excellent year thanks to record-breaking capacity. In 2023, Almarai processed more than 250 million birds. Thanks to our new production and processing facility in Hail, our Poultry revenue grew 16.8% to reach SAR 3.5 billion for the current year.

Technology-enabled Efficiency

Building on the digital advances we made in 2022, we continued with these initiatives in the current year to advance our efficiency and to find new ways to improve our engagement with our customers. Our research and development team is investigating emerging technologies and piloting new platforms to expand our capabilities.

During 2023, we successfully broadened our eCommerce presence, paving the way for further investment to strengthen our connections with our consumers and customers.

Our Strongest Asset

Our people are the strongest part of the success of our Company. This year, as in previous years, they delivered our commitments to our consumers, customers, stakeholders and the business.

Our people continued to prove their fortitude and resilience in the face of the challenges faced by the business, and I am particularly proud of their willingness to go the extra mile to deliver growth for our Company. We continue to support, engage with and rely on them to power our future, and I thank them wholeheartedly for their contribution in 2023.

Almarai in 2024

We are optimistic about Almarai’s continued growth story, thanks to our prudent financial approach, investments in the future and exceptional operational capabilities.

In 2024, we anticipate improving both top and bottom-line growth fueled by greater volumes and our ever-improving efficiencies to bolster our margins.

In the coming year, many of our investments in 2023 will begin to deliver value and build on our robust foundation for our Company’s continued, sustainable prosperity.

We will continue to seek and explore new opportunities for investment and expansion in our current markets and categories, and untapped areas. Accordingly, we expect to announce new initiatives in 2024 as we remain on course to deliver on our strategy for future growth.

Acknowledgments

Our customers and consumers are at the heart of our every move in Almarai’s unrelenting quest for better quality, choice and nutrition. We thank them for their trust and loyalty in 2023 and look forward to serving them with greater vigor and commitment next year.

Local authorities in Saudi Arabia also played an essential part in our success of supporting Saudi Arabia’s food security goals. We thank them for their partnership in delivering our mission.