SAUDI ARABIA – First Mills, a leading milling company in Saudi Arabia, saw its revenue increase by 4.5% during the first nine months of the year, driven by growth in its flour segment. However, net profit experienced a 17.5% drop, primarily due to financing costs.
The company reported a net profit of SAR 162.7 million (US$43.4 million) for the first nine months, and SAR 54 million (US$14.4 million) for the third quarter ending on September 30, marking a decrease of 14.9%.
This year-over-year decline can be attributed to the application of financing costs related to the merger with the parent company Al Raha Al Safi. Excluding the impact of interest costs, the like-for-like profit remains consistent with the same period in the previous year.
“First Mills delivered a solid set of results for the first nine months of 2023, in spite of the challenging market environment. Our core business is diversified and robust, and we are actively improving efficiencies to expand margins. The downstream businesses that we continue developing will start boosting in the last quarter of 2023, such as the launch of our PESA mill and mixing plant, with more to come in 2024 from the commissioning of our durum mill and mill-C upgrade,” Abdullah Ababtain, Chief Executive Officer, commented on the results.
He added that First Mills’ stable revenues, double-digit margins, and clear growth path tell me that First Mills is on the right track toward long-term value creation for our shareholders and all related stakeholders.
The revenue for the first nine months reached SAR 718 million (US$191.4 million), driven by an 8% growth in the flour segment, showcasing the company’s success in acquiring new customers and expanding its geographic coverage.
The third quarter revenue saw a 4.3% increase, with flour and feed segments leading the growth by 10% and 16%, respectively.
First Mills’ third-quarter capacity utilization reached 97.2%, a 7% increase compared to the same period the previous year.
The company has identified growing demand for its products in new geographical areas, which led to increased selling and distribution costs. However, operating expenses remained at the same levels as previous periods due to re-adjusting and managing general, administrative, and other expenses.
First Mills operates in multiple locations, producing flour and bran from its Jeddah, Qassim, Tabuk, and Al Ahsa plants and feed from its Jeddah and Qassim plants.
The company anticipates promising growth from two significant avenues. In its core business, First Mills aims to optimize cost and production dynamics to achieve economies of scale. It is also expanding into new downstream business segments that are expected to contribute to yield growth and increase the company’s market share.
First Mills is actively working on four projects, including a PESA mill, a pre-mix plant, a durum mill scheduled for commissioning in the fourth quarter, and a 250-tpd expansion of its Jeddah mill, also set to be commissioned in the fourth quarter.