The Saudi Dairy and Food Company (SADAFCO), one of the leading companies in the Kingdom's food and beverage sector, announced a slight decrease of 1.2% in its net profit for the fiscal year ending March 31, 2025. Net profit reached SAR 477 million, compared to SAR 483 million in the previous fiscal year, 2024.
Analysis of the reasons for the decline in profits
According to the official statement published by the company on the Saudi Stock Exchange (Tadawul), this slight decrease in profits is primarily attributed to a decline in the gross profit margin, which remained at a healthy level but lower than last year, registering 31.1% compared to 36.5%. The company explained that this decline resulted from a combination of factors, most notably the increased costs of key raw materials for carryover inventory, reflecting the global inflationary trend that impacted commodity prices. Additionally, the mix of products sold during the year contributed to this decrease, specifically a drop in ice cream sales, along with a significant increase in fuel prices that affected operating and logistics costs.
Operational efficiency in facing challenges
Despite pressure on profit margins, SADAFCO's results showed improved operational efficiency. Selling and distribution expenses reached 14.8% of net sales, down from 16.0% last year, indicating the company's success in optimizing its logistics and distribution operations. In contrast, general and administrative expenses saw a slight increase to 4.05% of net sales. Net finance income also decreased by SAR 15.7 million, which the company attributed to increased dividend payouts to shareholders during the year.
SADAFCO in the context of the Saudi and regional market
Founded in 1976, SADAFCO is a cornerstone of the Saudi and Gulf food industry, boasting brands firmly established in the minds of consumers, most notably the renowned "Saudi" brand. The company's financial performance reflects not only its internal situation but also sheds light on the challenges facing the entire consumer goods sector in the region. Global inflation, volatile raw material prices, and rising energy costs are challenges not unique to SADAFCO but are characteristic of the current global economy.
Importance and expected impact
Domestically, Sadafco’s performance demonstrates the ability of major Saudi companies to adapt to economic pressures and maintain strong profitability, even amidst minor setbacks. For investors, this relative stability can be seen as a sign of the company’s resilience and robust business model. Regionally, Sadafco’s results are an important indicator of the performance of the food and beverage sector in the GCC, where companies face similar challenges related to supply chains and costs. This financial report underscores that operational efficiency and cost control have become critical drivers of success in the current economic environment.
