Tanmiah Food Company has seen its nine-month (9M) net profit soar 144.9% YoY from SR25.9 million to SR63.5 million ($17 million), underpinned by a continued increase in sales volumes backed by its sustained production capacity expansion.

 

A market-leading provider of fresh and processed poultry and other meat products, animal feed and health products, and a foods brand franchise operator, has increased its revenue 35.6% year-on-year (YoY) to SR1,525.4 million.

 

Meanwhile, the gross margin improved to 24.1%, up from 22.5% during the same period last year, while EBITDA of SR185.9 million (+61% YoY) yielded a margin of 12.2%. 

 

Growth in topline

The growth in the topline performance was predominantly due to the expansion of sales volumes across the company’s portfolio of product and service lines, particularly fresh poultry and feed and animal health segments.

 

Fresh Poultry sales, the most significant contributor to Tanmiah’s revenues (69%), increased 36.3% YoY in 9M22 to SR1,057.6 million from SR775.8 million during the same period last year. The segment’s positive performance is supported by Tanmiah’s sustained production capacity expansion plans, which are underpinned by strategic government initiatives to enhance poultry production and a continuous rise in local consumer demand for fresh poultry. 

 

Further Processed Products, representing 19% of the Company’s total revenues, increased by 16.9% YoY to SR290.1 million during 9M22. This comes on the back of growth in demand from the food service channel, which thus led to an increase in sales volumes. 

 

Animal Feed and Health

Animal Feed and Health revenues grew by 60% YoY to SR161.1 million from SR100.7 million, primarily due to increased demand for animal health products and equipment. 

 

Food franchise operator revenues amounted to SR16.5 million in 9M22, with Q3 representing the third full quarter since the launch of the company’s food franchise vertical. During the quarter, Tanmiah opened 3 POPEYES stores in the kingdom, bringing the total to 13 operational outlets as of 30 September 2022.

 

Zulfiqar Hamadani CEO of Tanmiah, commented: “We concluded the third quarter with a robust growth in both the top and bottom line, thanks to our sustained capacity expansion plans and favorable market conditions, in addition to our ability to meet customer’s changing demands through the diversity of offerings within Tanmiah’s extensive portfolio.  

 

Leading regional poultry player

“Our position as a leading regional poultry player, the rising popularity of many of our products, and the government’s continuous support towards promoting domestic food production and self-sufficiency have cushioned us from turbulent changes in commodity prices. It has also enabled us to firmly control our pricing structures, thus improving margins for the third consecutive quarter.      

 

“With the recent completion of our landmark deal with Tyson Foods, we look forward to beginning the next exciting chapter in Tanmiah’s story. This strategic partnership will not only open doors to many future growth opportunities and create significant value for all stakeholders but will also further solidify our leadership in the market by promoting substantial improvements in scale, geographical presence, and operating efficiencies, as well as provide us with access to advanced and innovative production techniques.” 

 

Ahmed Osilan, Executive Board Member & Managing Director of Tanmiah said: “Tanmiah’s rapid growth within the food sector reflects our ambitious goals to become the pioneering company in promoting food security and self-sufficiency to support Vision 2030, and the objectives of the Ministry of Environment, Water and Agriculture, by implementing the best practices in terms of production and sustainability. Furthermore, our entry into the global Halal market, by attracting global investments to the kingdom, will enable the transfer of knowledge, localise jobs and local content, and contribute to enhancing the sector’s competitiveness, and the competitive advantages of local products, that are “Halal and Saudi Made” for export of our products, capturing opportunities in growing global halal market. This will contribute to our sustainability goals and maximise profit for shareholders, whilst providing the highest level of quality for customers and consumers.”

 

EBITDA surge

The company’s EBITDA surged to SR78.4 million in 3Q22, compared to SR35.6 million in 3Q21. For 9M22, EBITDA increased to SR185.9 million, compared to SR115.5 million in 9M21, despite the 33.7% YoY rise in selling, general, and administrative expenses.

 

Net Income climbed to SR31.7 million in 3Q22, a 755.53% increase YoY from SR3.7 million in 3Q21. For 9M22, net income rose by 144.9% YoY to SR63.5 million from SR25.9 million as a result of the substantial topline growth during the period, as fresh poultry sales conti

Tanmiah ended the period with SR125.4 million in cash and cash equivalents. 

 

Total borrowings amounted to SR395.7 million as of 30 September 2022, up from SR321 million at the end of June 2022. 

 

Capex decreased from SR87.8 million in 9M21 to SR82.7 million in 9M22. The planned capital expenditure in the next five years will focus on ramping up feed milling, primary processing, and further processing capacities, enabling the Company to seize new growth opportunities.  

 

Growth strategy 

Tanmiah remains on track to achieving its ambitious growth plans, which include expanding its production capacity for fresh poultry and further processed products and developing new and innovative products and services that cater to the changing demands of domestic and international consumers. 

 

The Saudi government continues to implement various initiatives to reinforce the local poultry sector and achieve self-sufficiency in food production. For instance, according to the Ministry of Environment, Water, and Agriculture, the kingdom is looking to localise 85% of the domestic food industry by 2030. 

 

The Public Investment Fund has also recently announced the launch of Halal Products Development Co, which targets localising the halal industry in the kingdom, covering sectors such as food, pharmaceuticals, and cosmetics while enabling Saudi companies to expand into global halal markets. 

 

In addition, the government is planning to invest SR17 billion towards expanding domestic poultry production to achieve a targeted capacity of 1.3 million tonnes of broiler chickens annually. 

 

In light of such strategic measures, Tanmiah is firmly positioned to unlock several growth opportunities and further reinforce its competitiveness in the regional poultry market.-- TradeArabia News Service