SAUDI ARABIA – Almarai Co., Saudi Arabia’s leading dairy business, has unveiled a US$4.8 billion investment program spanning over the next five years in a bid to diversify production and fortify food security within the kingdom.
The Riyadh-based company, boasting a 16% ownership by Saudi Arabia’s Public Investment Fund, disclosed its intention to channel funds into core dairy, juice, and baked goods products while earmarking resources for technological advancements.
Moreover, Almarai revealed plans to bolster supply chain logistics, broaden poultry sales, and introduce a plethora of new products, as outlined in a report to the stock exchange on Monday.
Despite Saudi Arabia’s stature as the world’s largest exporter of oil, it grapples with a reliance on imports for approximately 80% of its food supply.
The company said its strategy is aligned with Saudi Arabia’s Vision 2030 plan to diversify the economy away from oil by investing in other industries and selling state assets.
“Investment in the food industry contributes to achieving food security in the kingdom and the region while adding value to shareholders.”
Earlier, Almarai Co.’s board unveiled a detailed five-year strategic plan, outlining investments surpassing 18 billion Saudi riyals (US$4.80 billion) to align with the government’s goal of attaining food security.
Approximately SAR 7 billion will be directed towards poultry expansion, and SAR 5 billion to fortify existing core product categories (dairy, juice, and bakery).
SAR 1 billion will be used to explore promising new food segments, and SAR 4 billion to cultivate a robust supply chain and sales infrastructure supporting local and regional expansion.
Furthermore, a SAR 1 billion investment will fuel technology development efforts, focusing on innovation to propel growth and efficiency.
The plan is set to be financed through the company’s operational cash flows over the stipulated five-year period.
In January, Almarai disclosed a net profit of SAR 2.05 billion for 2023, marking a 16% increase from SAR 1.76 billion in the corresponding period of the prior year.
Notably, net profit for the fourth quarter escalated by 4.2% to SAR 370.72 million from SAR 355.82 million a year earlier.
This initiative unfolds against a backdrop of significant transformations in the region’s food industry, exemplified by Saudi Arabia’s largest food products company, Savola, announcing intentions to distribute its entire 35% stake in Almarai to eligible shareholders.
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