Almarai Company: Financial and Operational Performance in Saudi Market

Almarai began its journey in Saudi Arabia in 1977 as a result of a partnership between Saudi private sector and foreign investors. Initially focused on the production and regular distribution of fresh milk, it later became the first dairy company in the region to adopt a full vertical integration model, starting from fodder cultivation and cattle breeding to the manufacturing and distribution of final products. The company rapidly developed during the 1980s and 1990s with the increasing local demand for dairy products, adopting modern technologies for managing dairy farms and production lines. In 2005, Almarai listed its shares on the Saudi financial market (Tadawul), becoming one of the largest private sector companies in terms of capital and market value. It later expanded into juice, bakery, and poultry sectors, further enhancing its presence in the Gulf and some regional markets. This long history of innovation and investment in supply chains has given Almarai a strong competitive advantage in the local and regional market.

Almarai features a diverse ownership structure that includes strategic shareholders and local and international financial institutions. By the end of 2024, Savola Group was the largest strategic shareholder in the company with a stake of approximately 34.5%. At the end of 2024, Savola announced its intention to distribute its entire stake in Almarai to its shareholders, which will lead to increased dispersion of ownership among individual and institutional investors. Alongside Savola, contributions from Saudi investment funds, banks, and some individual investors are prominent. This structure enhances the company's financial stability and provides a supportive base of long-term vision investors. Savola's distribution of its stake represents an important shift in governance patterns and opens the door for more institutional interaction in managing the company and monitoring its market performance.

Since its listing on the Tadawul market in 2005, Almarai has become one of the heavyweight companies within the Saudi market index, especially in the food and beverage sector. Almarai's stock is symbolized by the code 2280 (or 1111 after coding updates). The company is one of the largest in terms of market value, estimated at around 160-165 billion Saudi Riyals in mid-2025. The performance of Almarai's stock has a direct impact on the performance of the general index of the Saudi market due to its large size and high trading value. This impact is evident during fluctuations in the stock price, as seen in the trading sessions at the end of 2024 when the stock declined by 2.1%, which reflected on the general index. Monitoring Almarai's performance serves as an indicator of the health of the food sector and institutional investment trends in the market.

Almarai's activities range from the production of fresh dairy, cheeses, yogurt, juices, bakery products, and poultry, in addition to fodder cultivation to ensure the quality and sustainability of the production chain. The company owns large dairy farms in Saudi Arabia and abroad, and processing and packaging factories equipped with the latest technologies. Almarai manages an extensive distribution network covering most regions of the Kingdom and Gulf countries, ensuring fresh products for consumers. The company adopts a vertical integration model, controlling all stages of the value chain, which reduces costs and increases operational efficiency. It also invests in research and development to introduce innovative products that align with consumer trends, such as fortified milk, healthy juices, and baby foods. Almarai is committed to quality and food safety standards, enhancing consumer trust in its products.

Financial indicators for 2024 indicate stability and relative growth in Almarai's performance. The stock price was approximately 58 Saudi Riyals in mid-2025, with a market value estimated at 160 billion Riyals. The price-to-earnings (PE) ratio ranges between 18-20, which is an average rate for consumer sector companies. The company's dividend distribution policy reflects notable stability, with a cash distribution yield of about 3%. The company recorded an annual revenue growth of about 4% in 2024, and net profits increased by nearly 5%, despite inflationary pressures and rising feed and energy costs. The latest quarterly performance showed continued moderate growth in sales and improved profit margins, indicating the effectiveness of management strategies in facing sector challenges. Almarai maintains a balanced financing structure and strong liquidity, placing it in a comfortable position to continue investing and expanding.

Almarai's growth depends on several key factors: First, the expansion of production and products, as the company continues to introduce new products such as organic juices and fortified dairy, opening new markets and enhancing its customer base. Second, investment in infrastructure and production capabilities, as the company expands its farms and factories and adopts advanced automation and quality control technologies. Third, effective cost management, as it benefits from large scale and vertical integration to reduce the impact of fluctuations in feed and energy prices. Additionally, Almarai benefits from increasing consumer awareness of nutrition and the rising population in Saudi Arabia and the region. These combined factors support operational sustainability and position the company to maintain moderate revenue and profit growth in the medium term.

The food and beverage sector is one of the fundamental pillars of the Saudi economy, driven by high population growth and a government trend towards enhancing food security within Vision 2030. The demand for dairy and beverage products is stable and growing, with consumers preferring high-quality local products. Companies in the sector face numerous challenges such as rising raw material costs, intense competition, and trade protection policies. The government seeks to support local producers through import facilitation for feed, land grants, and support for expansion projects. In this context, Almarai stands out as a sector leader due to its integrated supply chains and financial strength, giving it a better ability to withstand market fluctuations than smaller or imported companies. However, continued growth requires keeping pace with changes in demand, technology, and regulatory policies.

Despite the significant market share held by Almarai (exceeding 40% in some products), it faces competition from many local and international companies. Notable competitors include Sadafco (a Saudi-French partnership with the Danone brand), National Poultry, Savola Foods, and global juice and beverage companies like Coca-Cola. There are also local dairy companies such as Nadec, in addition to imported dairy products from Egypt and other countries. Competition varies between prices, quality, product diversity, and distribution channels. Almarai's distinction lies in its production volume, vertical integration, and brand strength, but its continued success requires maintaining innovation and product development to face competitive pressures.

Almarai has witnessed several notable developments during 2024-2025. The most prominent was Savola Group's announcement to distribute its stake in Almarai to its shareholders, which will increase the company's ownership dispersion and enhance liquidity in the stock. The company also continued its policy of distributing cash dividends without reduction, reflecting financial performance stability and management confidence in the continuity of cash flows. Recent quarterly results revealed moderate growth in revenues and profits despite ongoing inflationary pressures. In terms of expansion, the company is investing in developing production capacities and smart technologies to enhance efficiency and reduce costs. It also announced initiatives to enhance job localization and local content, aligning with the requirements of Vision 2030. These developments affirm Almarai's commitment to sustainable growth and maintaining its leading position in the market.

Almarai faces several recurring challenges that affect its financial and operational performance. Among the most significant challenges are fluctuations in raw material prices, especially feed and energy, which constitute a large part of production costs. Additionally, intense competition from local and global companies may affect profit margins. Furthermore, changes in regulatory policies, such as Saudization requirements and support for local products, necessitate additional investments in labor and development research. Climate changes and their impact on agricultural production also pose a risk factor. Despite the company's effective management of these risks through hedging and diversifying supply sources, continued growth requires constant vigilance and rapid response to market changes.

Almarai aims to continue expanding its production capabilities and regional markets, focusing on investing in modern technologies and improving the supply chain. The company plans to increase the production of milk and high-margin dairy products, in addition to expanding into children's products and organic juices. It also targets new markets in the Gulf and possibly some Asian countries. Investments in research and development contribute to innovating products that meet changing demand and health food trends. At the environmental and sustainability level, Almarai is working to improve energy and water consumption efficiency in its facilities and develop partnerships with Saudi universities and research centers. This strategy aims to enhance competitiveness and achieve sustainable growth in the long term.

Almarai represents one of the influential pillars in the Saudi financial market index (Tadawul), especially due to its large size and high trading value of its stock. Any change in the price of Almarai's stock significantly affects the general index, as seen in the trading sessions at the end of 2024. Economically, the company contributes to supporting food security, localizing jobs, and enhancing local value chains. Almarai's projects in feed, livestock production, and food manufacturing play an important role in reducing reliance on imports. The company also supports agricultural innovation and provides training and employment opportunities for Saudis. Its contribution to the national economy is enhanced as it expands into foreign markets, making it a model for national companies with regional and global dimensions.

Almarai places special importance on commitment to social and environmental responsibility within its corporate strategy. The company has launched several initiatives to enhance local content and localize jobs, in collaboration with Saudi universities and training institutions. It also invests in improving energy efficiency and reducing carbon emissions in its factories and farms. The company adheres to high standards of quality and food safety and supports health and nutrition awareness programs for the Saudi community. Additionally, Almarai contributes to national food security initiatives by increasing local production and investing in sustainable agricultural technologies. These efforts enhance the company's image as a responsible partner in sustainable development and support consumer and investor confidence in its performance.