Almarai to invest $4.2bn in food business

Almarai’s board of directors has approved a SAR15.7bn ($4.2bn) five-year investment plan, as part of its strategy to expand its business across the dairy, bakery and poultry segments.

This is the largest capital investment for the Saudi food company, enabling it to expand its capabilities in farming, manufacturing, distribution and logistics.

The five-year plan, starting from 2013, will also provide funding to support product innovation, new business development, efficient use of existing resources, and development and training of workforce.

Almarai plans to tap funds for the investment through its operating cash flows, traditional bank facilities, Saudi Industrial Development Fund and Arab Development Fund funds, or its recently launched Sukuk programme, an Islamic equivalent of bonds.

The company has been seeking international expansion of its business. In March 2012, it raised the stake in International Dairy and Juice Limited (IDJ), a joint venture formed with beverage giant PepsiCo, from 48% to 52% with an investment of $22.4m.

In December 2011, Almarai invested $83.18m to acquire the 100% stake in Fondomonte, a company that owns and operates three farms in Argentina, to secure its supply of farm feed for dairy herd and poultry businesses.

For the first quarter ended 31 March 2012, the company reported net profit of SAR 242.1m ($64.54m), up 2.9% from the previous year, while sales increased 17% to SAR2.04bn ($543.89m), driven by its expansion into other Gulf markets.

Almarai, based in Riyadh, Saudi Arabia, manufactures dairy and juice products under the Almarai brand; bakery products under the L’usine and 7 Days brands; and poultry products under the Alyoum brand.