Nadec: Financial Performance and Competitive Position in Saudi Market

Nadec, the National Agricultural Development Company, was established in 1981 through a partnership between the Saudi Fund for Development and local and foreign investors. The company represents one of the pillars of food security in Saudi Arabia, producing and distributing dairy, juices, and agricultural products such as dates and honey. Nadec has distinguished itself from the outset with its integrated activities, encompassing agriculture, livestock production, food manufacturing, and distribution, allowing it to build a comprehensive value chain. Nadec was listed on the Saudi Tadawul market in 2005 under the symbol (4165), and has since been subject to the oversight of the Capital Market Authority, with a commitment to regular financial disclosure. Nadec's ownership structure is diverse, including both government and private sectors, with Arasco (owned by the Public Investment Fund) being the largest shareholder, alongside institutional investors and individual shareholders. Nadec's stock is widely monitored by analysts and investors as an indicator of the agricultural food sector's performance, and the company benefits from its position in the sectoral indices of Tadawul. Its commitment to international accounting and disclosure standards enhances its credibility in the market, making it a prominent option for monitoring within the Saudi stock market.

Nadec witnessed a notable improvement in financial performance indicators during 2024 and 2025. The stock price in mid-2025 was approximately 29.5 SAR, with slight fluctuations around this level. The market capitalization rose to nearly 17 billion SAR, reflecting market confidence in the company's results. In terms of earnings per share, the company recorded an expected annual profit of about 1.94 SAR per share, giving it a price-to-earnings (P/E) ratio ranging between 13 and 15, which is moderate compared to the average in the Saudi food sector. The cash dividend yield for shareholders ranged between 2% and 3% for 2024, with the company announcing limited cash distributions, balancing between reinvesting profits and providing returns to shareholders. In quarterly results, Nadec achieved revenues of approximately 1.6 billion SAR in the third quarter of 2024, an increase of over 23% compared to the same period in 2023, with a net profit of 191.7 million SAR, an exceptional increase of 429%, driven by improved profit margins and inventory valuation according to new policies. These results reflect a strong recovery following a restructuring phase and expansions, placing the company in a more robust financial position by the end of 2024 and the beginning of 2025.

The food and agriculture sector in Saudi Arabia is considered a strategic sector, supported by the government to achieve food self-sufficiency. The sector includes companies producing dairy, meat, grains, and vegetables, benefiting from increasing demand due to population growth and improved living standards. Companies in the sector, including Nadec, receive government support through financing programs, provision of agricultural lands, and logistical facilitation. Nadec faces challenges such as rising feed and energy costs, competitive pressures from imported products, and fluctuations in climate and global prices. Conversely, innovations in smart agriculture, expanding exports, and investing in sustainability provide growth opportunities. Nadec stands out as one of the largest dairy producers in the Kingdom, benefiting from its own farms and transportation and distribution fleets, giving it a competitive advantage in fresh products. The sector is expected to continue growing at a moderate pace, with ongoing government support and an increasing focus on sustainability, enhancing Nadec's opportunities to increase its market share and improve profit margins.

Nadec faces strong competition in the Saudi food market, with its main competitor being Almarai, which leads the sector with a significant market share and advanced infrastructure, followed by Danone's Safi (Savola), specializing in high-quality dairy products. It also competes with Tanmia Food in feed and poultry products, as well as startups like Badol in the fresh dairy category. There are also complementary food companies such as Abukar (canned products) and United Livestock and Anam in the meat and feed sector. Geographic spread, product quality, and pricing play a crucial role in determining market share, and Nadec is working to enhance its competitiveness by improving product quality and expanding distribution channels to cover most regions of the Kingdom. Competition remains primarily local, as imported products face challenges related to local specifications and standards. Despite the competition, Nadec has managed to achieve growth in its profits and market share recently, benefiting from effective marketing and distribution strategies, and innovations in products that meet the aspirations of Saudi consumers.

Nadec's ownership structure is characterized by diversity between the government and private sectors. Arasco (owned by the Public Investment Fund) holds the largest stake, exceeding 55% of the shares, alongside institutional shareholders such as the National Commercial Bank and agricultural institutions, with a portion of shares owned by the public from small investors. This structure reflects state support for the company's mission to achieve food security, while also enhancing Nadec's ability to access the necessary capital and expertise for expansion. The executive management has seen limited changes in 2024, including the appointment of a new CFO from a similar sector, as part of a strategy to improve efficiency and transparency. Nadec follows strong governance practices and adheres to clear policies in financial disclosure and compliance with the Capital Market Authority regulations, enhancing investor confidence and enabling the company to attract talent and develop its administrative and operational capabilities.

Recent quarterly results for Nadec during 2024 showed strong performance, especially in the third quarter, where revenues increased by 23% to 1.6 billion SAR, and net profit surged to 191.7 million SAR, up 429% from the same period in 2023. This improvement is attributed to increased sales, enhanced profit margins, and restructuring of inventory and operational processes. In the first half of the year, the company faced some pressures due to high costs associated with expansions and restructuring, but the second half saw a strong recovery. Preliminary results for the fourth quarter indicated stable revenues and continued profitability. These indicators reflect the company's success in managing costs, enhancing productivity, and benefiting from government support and new initiatives. Nadec also launched expansion projects in agriculture and invested in developing its supply chain and logistical operations, contributing to improved financial and operational performance by the end of 2024 and the beginning of 2025.

Nadec follows a moderate dividend policy, distributing a portion of its cash profits to shareholders while retaining another part for business expansion and product development. In 2024, the cash dividend yield was around 2-3%, a relative decrease from the previous year, which recorded higher yields reaching 7% in some periods. This change is due to the management's desire to strengthen the financial position and provide financing for agricultural expansions and efficiency improvements. Nadec typically targets distributing 10-20% of its annual net profits, with the possibility of adjustment based on the company's results and market conditions. This policy reflects a balance between rewarding shareholders and providing resources for sustainable growth, and is among the practices followed by rapidly growing agricultural companies. Dividend distributions are subject to the annual general assembly's decision and based on the board of directors' recommendation, with full disclosure via Tadawul to ensure transparency.

Nadec places significant importance on Environmental, Social, and Governance (ESG) standards, aligning with the global and local trend towards sustainability. The company has launched initiatives to rationalize water consumption in its farms, adopted advanced irrigation systems, and smart farming techniques to reduce waste. It has also invested in solar energy to power cooling facilities and participated in social responsibility programs such as supporting charities and developing small farmers. In terms of governance, Nadec is committed to accurate disclosures and transparent policies, applying governance standards approved by the Capital Market Authority. These efforts enhance the company's image as a responsible institution and support its ability to attract institutional investors who prefer companies with sustainable performance. Nadec also meets the requirements of local and international customers regarding eco-friendly products, enhancing its competitiveness in the local and regional market.

Nadec has witnessed several notable developments during 2024 and 2025, including achieving record financial results in the third quarter of 2024 with a profit growth of 429%. The company also acquired new agricultural land as part of government initiatives to support self-sufficiency, enhancing Nadec's capacity to increase the production of feed and grains. Nadec launched new products in the juice and food sector and strengthened its marketing and distribution operations to expand its market share. In terms of management and technology, the company implemented an advanced ERP system to improve supply chain management and made changes in financial management to enhance operational efficiency. Nadec also continued to adopt environmental initiatives, such as investing in solar energy and focusing on social responsibility. Analytical reports from financial institutions have expressed optimism about Nadec's performance, noting the impact of feed prices and market changes on future results. Overall, these developments reflect the company's dynamism and ability to adapt to changes and achieve sustainable growth.

Nadec's stock performance is influenced by several factors, including the company's quarterly and annual financial results, developments in the agricultural and food sector in the Kingdom. Inflation and rising feed prices also play a significant role in determining profit margins, as rising costs exert pressure on the company's profits. Competition with major companies such as Almarai and Danone's Safi affects Nadec's market share, especially in fresh products. Positive factors include ongoing government support, new investment projects, and the adoption of modern technologies in agriculture and manufacturing. Global fluctuations in raw material prices and changing consumer tastes remain risks facing the company. The dividend distribution policy is an attraction for investors seeking regular income, although the dividend yield is subject to changes in operational performance and market conditions. Finally, transparency in disclosure and adherence to governance standards enhance investor confidence and mitigate stock volatility compared to some smaller companies in the sector.

Nadec focuses its future strategy on enhancing its position as an integrated agricultural company, with plans to expand its production capacity for dairy and juices and increase its investments in agricultural lands. The company is expected to continue adopting smart farming technologies and improving livestock production efficiency through the application of global best practices in cattle feeding and farm management. Nadec is exploring partnership and collaboration opportunities with local and international companies to develop new products and increase added value. The company also aims to expand exports to Gulf markets and neighboring countries, leveraging government initiatives to support food exports. Among future projects is the establishment of new production lines for products such as olive oil and honey, and the development of a frozen food unit. Management focuses on sustainability, developing human capital, and improving financial and operational processes to ensure sustainable growth and increased profitability in the long term.

Nadec is committed to the highest standards of financial disclosure and transparency, in accordance with the requirements of the Saudi Capital Market Authority and international accounting standards. The company issues detailed quarterly and annual reports on its financial results, in addition to disclosing any material developments or events affecting its operations. This transparency allows investors and analysts to accurately assess the company's performance and compare its results with competing companies in the sector. Regular disclosures enhance Nadec's credibility and investor confidence, and are an important factor in stabilizing the stock price and making it attractive to institutional and individual investors. The company also adheres to clear policies in risk management and governance, reducing the likelihood of negative surprises and enhancing its ability to face market and economic challenges. In light of these commitments, Nadec continues to build a strong reputation among companies listed in the Saudi financial market.

Based on the results of 2024 and operational developments, forecasts indicate that Nadec will continue to achieve moderate growth in revenues and profits during 2025, supported by expanded sales and improved operational efficiency. The company is expected to remain within a moderate price-to-earnings ratio (13-15), with the potential for improved dividend yields if profits continue to grow. Ongoing government support and the expansion of agricultural lands enhance the company's ability to withstand fluctuations in feed and raw material prices. In the medium term, Nadec may benefit from increased local demand for fresh foods and rising food awareness, in addition to export opportunities. However, risks related to competition and market changes remain present, requiring the company to continue focusing on innovation and improving operational processes. It is important for investors to monitor periodic disclosures and consult a licensed financial advisor before making any investment decisions based on future performance expectations.