Almarai OK’s $4.2b plan

Saudi Arabian dairy and food producer Almarai Co’s board has approved a SR15.7-billion ($4.2 billion), five-year investment plan that will draw on finance from bank loans and Islamic bonds, it said Tuesday.

The money will replace the company’s existing investment base and fund expansion between 2013 to 2017 of its operations in farming, manufacturing, distribution and logistics, Almarai said in a bourse statement.

It added the investment will also boost its product innovation and develop its Saudi workforce.

Almarai has been keen to expand its footprint outside its core presence in the Gulf. In December, the company acquired Fondomonte S.A which owns and operates farms in Argentina, to secure feed for its dairy herd and poultry businesses.

“Financing of this program will be mostly done from the company’s operating cash flows but it will also utilize expansion of its financing capabilities either via traditional bank facilities, Saudi Industrial Development Fund and Arab Development Fund funds or via the sukuk program recently launched,” it said.

Almarai, the Gulf’s largest dairy firm by market value, raised SR1 billion through its first sukuk in March, which it said was 4.7 times oversubscribed.

The company’s first-quarter net profit was SR242.1 million, a 2 percent increase on an annual basis with sales growing 17 percent as it pushed further into other Gulf markets.

Almarai’s acquisitions so far afield outside the Gulf region are largely motivated with achieving food security, which follows a general trend shown by other countries in the area.