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Tanmiah Food Co. announces its Interim Financial Results for the Period Ending on 2022-06-30 ( Six Months )

Element ListCurrent QuarterSimilar quarter for previous year%ChangePrevious Quarter% Change
Sales/Revenue 530.58366.5244.76435.3321.88
Gross Profit (Loss) 133.9478.1871.3291.0747.07
Operational Profit (Loss) 41.569.66330.238.46391.25
Net Profit (Loss) after Zakat and Tax 30.23.42783.041.541,861.04
Total Comprehensive Income 30.23.42783.041.541,861.04
All figures are in (Millions) Saudi Arabia, Riyals
Element ListCurrent PeriodSimilar period for previous year%Change
Sales/Revenue 965.91734.8631.44
Gross Profit (Loss) 225.01167.534.33
Operational Profit (Loss) 50.0236.2737.91
Net Profit (Loss) after Zakat and Tax 31.7422.2142.91
Total Comprehensive Income 31.7422.2142.91
Total Share Holders Equity (after Deducting Minority Equity) 377.77369.942.12
Profit (Loss) per Share 1.591.11
All figures are in (Millions) Saudi Arabia, Riyals
Element ListExplanation
The reason of the increase (decrease) in the net profit during the current quarter compared to the same quarter of the last year is Tanmiah recorded an increase in net profit to SAR 30.2 million in 2Q2022 from a net profit of SAR 3.4 million in 2Q2021 due to the following reasons:

Revenue: Increased by a significant 44.8% to SAR 530.6 million, as a result of sustained growth across all product and service lines. The main driver for the growth in revenue was a pickup in fresh poultry sales during the period, as the company continues to benefit from rising demand and increased capacity.

Cost of Sales: Increased by 37.6% due to an increase in the cost of raw materials in international commodities markets, and an increase in volumes, along with a sustained expansion of Tanmiah’s production capacity from 370,000 birds per day at the end of 2021 to 420,500 birds per day (net of rental capacity) as of the end of June 2022, following a recent refurbishment of the company’s primary processing facility in Majmah, north of Riyadh.

Gross Profit: Increased substantially by 71.3%, as the improvement in the top line largely outweighed the increase in Cost of Sales during the period.

Selling, General and Administrative Expenses (SG&A): Increased 35.9% to SAR 91.7 million compared to the same quarter of the previous year, due to increasing the market share especially in the fresh chicken category and the expansion of the branch network and workforce, to support Tanmiah’s strategic growth agenda.

The reason of the increase (decrease) in the net profit during the current quarter compared to the previous quarter of the current year is Tanmiah recorded a significant improvement in net profit to SAR 30.2 million in 2Q2022 from SAR 1.5 million in 1Q2022 due to the following reasons:

Revenue: Increased 21.9%, due to a continued positive performance across most segments, especially fresh poultry, which is set to remarkably benefit in the medium term, from large-scale strategic government initiatives aimed at enhancing poultry production in the Kingdom.

Cost of Sales: Increased 15.2% as raw material costs are still exhibiting an upward trend, amidst the current volatile global geopolitical landscape.

Gross profit: Increased 47.1% due to margin recovery in the fresh chicken category and a pickup in sales volumes.

Selling, General and Administrative Expenses (SG&A): increased 10.9% to SAR 91.7 million compared to the previous quarter, as a result of expansion of the distribution network and increasing marketing activities to support sales.

The reason of the increase (decrease) in the net profit during the current period compared to the same period of the last year is Tanmiah reported an increase in net profit to SAR 31.7 million in 1H2022 from a net profit of SAR 22.2 million in 1H2021 due to the following reasons:

Revenue: Increased 31.4% to SAR 965.9 million, due to an improvement in the performance of the Company’s business segments, with fresh poultry and further processed products being the key contributors to this growth.

Cost of Sales: Increased 30.6% due to the rising trend in the cost of Tanmiah’s main raw materials, complemented with significant investments undertaken by the Company, that are aimed at increasing the production capacity for both fresh poultry and further processed products, in line with the continued execution of its strategic expansion plans.

Gross Profit: Increased 34.3% in 1H2022, as a result of passing on the increase in input costs, through the sales prices of its products in the market, and improved efficiencies and effective utilization of new assets.

Selling, General and Administrative Expenses (SG&A): Increased 35.1% to SAR 174.4 million from SAR 129 million in 1H2021, which was the result of as a result of expansion of the distribution network and increasing marketing activities to support sales.

Statement of the type of external auditor's report Unmodified conclusion
Reclassification of Comparison Items None
Additional Information Tanmiah reported second quarter revenues of SAR 530.6 million, up 44.8% year-on-year (YoY) from SAR 366.5 million. Top-line growth was primarily driven by a sustained improvement in performance across the board, particularly for fresh poultry and further processed product segments. This was largely supported by an increasing preference by consumers for domestic freshly produced chicken in addition to gradual price increases. Tanmiah’s fast food franchise operations have continued to deliver a healthy performance, ever since the launch of POPEYES® in the latter part of 2021, and the company remains on track to expand the network of stores across the Kingdom.

Fresh Poultry sales, the largest contributor to the Company’s revenues (71%) increased 47.4% to SAR 376.6 million in 2Q2022. The segment’s performance continues to be boosted by Tanmiah’s sustained capacity expansion in order to meet the rising demand for the company’s products. The Group’s daily capacity increased from 370,000 birds per day at the end of 2021 to 420,500 birds per day (net of rental capacity) as of the end of June 2022 following a recent upgrade of the primary processing facility in Majma, north of Riyadh.

Further Processed Products revenues grew 32.3% YoY to SAR 98.5 million in the second quarter. The increase in sales was primarily the result of growing demand in the food service channel sector and a revision of prices for key food service customers during contract renewals.

Feed and animal health revenues grew 35.9% to SAR 49.8 million in 2Q2022. The increase in sales was due to rising demand for animal health products and equipment.

Food franchise operator revenues totalled SAR 5.8 million for 2Q2022 (compared to SAR 4 million in 1Q2022), reflecting the second full quarter since the launch of the food franchise vertical. During the quarter, Tanmiah opened 4 POPEYES® stores with a total of 10 outlets now operating in the Kingdom.

Growth Strategy

Tanmiah has continued to focus on the successful execution of its expansion strategy, as it embarks on a new era of sustainable growth, through leveraging its fully integrated and highly efficient business model. The domestic market is dynamic and enjoys strong underlying fundamentals, underpinned by the government’s implementation of comprehensive economic transformation programs under Vision 2030. Tanmiah has also continued to capitalize other strategic initiatives by the government to reinforce the domestic food sector, whereby the Company has obtained a short-term financing facility of SAR 150 million from Agricultural Development Fund (ADF) to finance the import of grains. Additionally, the Saudi government has recently announced that it is intending to invest SAR 17 billion to be allocated towards expanding poultry production, with the target being 1.3 million tons of broiler chickens per year. Moreover, Tanmiah has recently secured a EUR 48.2 million long term Shariah compliant facility from Rabobank to further support its expansion program.

In light of the current environment that is conducive to growth, and the Company’s financing capabilities and resilient balance sheet, Tanmiah remains well-positioned to make further significant progress on its expansion plans, whilst mitigating the volatility in input costs.

Furthermore, the Company has recently entered into a landmark partnership with Tyson Foods (“Tyson”), whereby Tyson will acquire a 15% stake in Agriculture Development Company ("ADC") and a 60% stake in Supreme Foods Processing (“SFPC”). Tanmiah considers this partnership an important milestone in its 60-year journey, demonstrating its commitment to its pioneering role in reinforcing the Saudi Arabia's food security and self-sufficiency goals. This is also expected to accelerate the Company’s strategic expansion plans, through doubling production capacity in further processed products, and will contribute to the global Halal poultry market through job creation in the Kingdom, supported by international industry expertise.

The Company has increased its local sales of fresh chicken by 50.7% over the past four years from 66.3 million chickens in 2018 to 99.9 million in 2021 as a result of continued investments in its assets and operations.

Planned capital expenditure in the next five years will be targeted primarily towards increasing feed milling, primary processing and further processing capacities, which will allow the Company to capture new and emerging growth opportunities. The Company’s capital investments are expected to result in an improvement in revenues and margins, supported by the growing popularity of Tanmiah’s products.

Diversification efforts also include expanding Tanmiah’s food franchise operations business, which was introduced in 2021 and cemented by an agreement with POPEYES® for its new restaurants roll-out in the Kingdom over the coming years.

Attached Documents  

The Capital Market Authority and Saudi Exchange take no responsibility for the contents of this disclosure, make no representations as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this disclosure, and the issuer accepts full responsibility for the accuracy of the information contained in it and confirms, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts or information the omission of which would make the disclosure misleading, incomplete or inaccurate.

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