Almarai, a leading dairy company in Saudi Arabia posted a net profit of SR286.5 million ($76 million) after zakat and tax during the fourth quarter (Q4) of the year, marking a decrease of 14.7% against Q4 2020.

The earnings missed estimate of Al Rajhi Capital by about 7%, the Saudi financial services provider said in a comment.

The key reason for this miss was gross margin dilution by 425bps (28.0% in Q4 2021 V/s 32.3% in Q4 2020). The reason for gross margin erosion was at the back of increase in farming and dairy commodity prices and due to increase in international freight and packaging charges, Al Rajhi Capital said.

Operating expenses increased by 9% y-o-y, at the back of higher volume and revenue. Revenue growth was positively aided by growth across all channels and countries, except Bahrain, which reported flat revenue due to VAT roll out earlier in the year, the report said.

Oman on the other hand reported positive growth in revenue, after two years of decline due to higher competition. Deleveraging and lower interest environment aided in lower interest expense, thereby supporting the net margins to a certain extent, said Al Rajhi Capital in the comment. – TradeArabia News Service