SAUDI ARABIA – First Milling Company (“First Mills”), a leading Saudi milling enterprise known for its premium flour, animal feed, bran, and wheat derivatives, has unveiled its impressive financial results for the first half (H1) and second quarter (Q2) of 2024.
For H1 2024, First Mills reported a significant 10.5% year-on-year (YoY) revenue growth, totaling SAR 518.8 million (approximately US$ 138.4 million).
This growth was largely fueled by a robust 31.1% increase in Feed sales, driven by favorable market conditions and the introduction of new products, including entries into the poultry market.
Despite a 6% decrease in Bran sales due to a strategic shift towards Feed production, Flour sales rose by 7.3%, supported by the popular Aloula “small-pack” products. This uptick in Flour sales helped capture a larger segment of the competitive retail market.
The Company’s strong sales momentum was further enhanced by capacity upgrades at its Jeddah plant and heightened demand during Ramadan.
Effective cost management and optimized Shariah-compliant Murabaha deposit interest income led to a 13.4% increase in net profit, reaching SAR 123.2 million (approximately US$ 32.8 million), with a net margin of 23.8%.
Flour and feed sales drive strong revenue growth, healthy margins
In Q2 2024, revenue surged by 13.3% YoY, driven by growth across all product categories. Feed sales led the charge with a remarkable 36.3% increase, a result of the Company’s strategic focus on meeting rising demand.
Flour and Bran sales also grew by 6.7% and 5.5% YoY, respectively. This broad-based growth highlights the effectiveness of First Mills’ strategy to diversify its customer base and extend its geographic reach within the Kingdom.
Abdullah Ababtain, Chief Executive Officer of First Mills, highlighted the Company’s achievements, stating,
“We are thrilled to report positive financial outcomes for both the second quarter and the first half of 2024, marking a successful first anniversary of our listing on the Saudi Exchange. Our strong performance demonstrates our capability to drive revenue growth and profitability, particularly through the strategic expansion of Flour and Feed sales.”
According to him, this success reflects their commitment to operational optimization, portfolio expansion, and product diversification.
Operating profit for H1 2024 reached SAR 158.2 million (approximately US$ 42.1 million), marking an 11.2% increase. Q2 operating profit grew by 24.4% to SAR 63.8 million (approximately USD 17.0 million), underscoring the Company’s strong financial performance and robust sales growth.
Net profit for Q2 2024 rose by 30.4% to SAR 45.5 million (approximately US$ 12.1 million), driven by continued growth in small-pack products and an expanded distribution network. However, the revenue and net profit decline compared to Q1 2024 is attributed to seasonal factors, with Ramadan typically boosting Flour demand.
Successful CAPEX deployment boosts capacity utilization and cost efficiency
The completion of Mill C and the ongoing upgrade of Mill A in the Jeddah Plant have significantly improved production efficiency and capacity utilization. These CAPEX investments have raised installed wheat milling capacity utilization to 88%, up from 84% in the previous year.
First Mills’ strategic diversification of its product mix has resulted in Flour sales contributing 54.5% of revenue in Q2 2024, down from 57.9% in 2023. Bran sales’ contribution decreased from 19.1% to 17.8%, while Feed sales saw a notable increase to 27.7% of revenue, up from 23% in 2023.
Revenue growth was consistent across all reporting regions in Q2 2024, with Qassim Plant leading at 26.9%, followed by Al Ahsa Plant at 10.1%, Jeddah Plant at 8.8%, and Tabuk Plant at 4.6%.
The Company generated SAR 126.8 million (approximately US$ 33.8 million) in free cash flow for H1 2024, a significant increase from SAR 111.9 million (approximately US$ 29.8 million) in H1 2023. This improvement reflects the effectiveness of First Mills’ working capital model and strategic capital allocation.
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