The board of directors of the Saudi Dairy and Food Company (SADAFCO) announced, in a strategic decision aimed at restructuring its international operations, its formal approval to begin voluntary liquidation proceedings for three of its subsidiaries in Kuwait, Jordan, and Bahrain. This announcement was made in an official statement published by the company today on the Saudi Stock Exchange (Tadawul) website, detailing this fundamental shift in its business model.
Details of the companies covered by the decision
The company explained in its statement that the decision includes the following entities:
- Sadafco Kuwait Food Company LLC: It is 49% owned by the company, and its capital amounts to 662,950 Saudi Riyals.
- Sadafco Jordan Food Products LLC: It is wholly owned by the company at 100%, with a capital of SAR 1,331,749.
- Sadafco Bahrain LLC: It is also 100% owned, and its capital is 500,000 Saudi Riyals.
Reasons for strategic shift and objectives
This decision comes as part of a comprehensive plan aimed at improving the company's operational efficiency. Through this move, SADAFCO seeks to transition from a "self-operating model," which requires direct management and incurs high administrative and operational expenses in those countries, to a "distribution model" through local agents. This shift will enable the company to reduce fixed costs and focus more on its core manufacturing and marketing activities, thereby enhancing profit margins in the long term.
Product continuity and market presence
Sadafco's management confirmed that the liquidation of these companies does not mean the withdrawal of its products from the Kuwaiti, Jordanian, and Bahraini markets. On the contrary, the strong "Saudi" brand and other company products will continue to be present in these vital markets through the appointment of authorized distributors with extensive experience in the local markets, which will contribute to expanding coverage and reaching wider consumer segments more efficiently.
An overview of Sadafco's position and history
The Saudi Dairy and Food Company (SADAFCO) has been a cornerstone of food security in Saudi Arabia and the Gulf region since its establishment in 1976. The company is renowned for its "Saudi" brand, which holds a significant market share in the long-life milk, tomato paste, and ice cream sectors. This decision reflects the company's resilience in adapting to economic changes and its ability to make bold decisions that serve the interests of its shareholders and enhance the sustainability of its operations.
Expected financial impact
Regarding the financial impact of this action, the company noted that the financial effect will be disclosed in the consolidated financial statements after the completion of the liquidation process. However, the company's current outlook indicates that the financial impact will not be material, reflecting the limited scale of operations of these subsidiaries compared to the overall size of Sadafco's vast regional operations.
