First Mills earnings soar 4.5% to US$125.29M in first half (H1) 2023

SAUDI ARABIA – First Milling Company (First Mills), a leading Saudi milling company, has achieved a 4.5% year-on-year (YoY) growth in sales to generate a total revenue of SAR 470 million (US$125.29 million) in H1 2023.

The financial performance follows a report released on July 31 detailing the company’s performance for the first half (H1) and second quarter (Q2) of 2023, attributing the top-line improvement to the company’s growth strategy and business-to-business retail channels.

According to the report, second-quarter revenue rose 3.4% to SAR 214 million (US$57 million), supported by efforts to optimize efficiencies and enhance capacities.

First Mills attributed the growth to capacity utilization in the second quarter which reached 99%, increasing 7% compared to the same period last year.

“In the first half of 2023, First Mills demonstrated its continued ability to drive revenue growth from a firm foundation of large-scale production capabilities, high utilization rates, and efficient operations,” said Abdullah Ababtain, chief executive officer of First Mills.

“Our commitment to operational excellence has allowed us to maximize productivity, effectively meeting the growing demand for our products,” he added.

The company closed the first half of 2023 with an EBITDA of SAR 166 million, flat over the same period last year, reflecting healthy financial performance. In the second quarter, EBITDA declined 18% year-over-year to SAR 63 million as a result of changes in seasonal sales during the Ramadan season between 2022 and 2023.

Additionally, there was an increase in selling and distribution costs attributed to supporting the Jeddah plant with flour products during the temporary shutdown of the plant’s Mill C for capacity upgrades. 

In June, First Mills listed its shares on the Main Market of the Saudi Exchange (Tadawul).

First Mills H1 2023 profit falls 19% to SAR 108.7m (US$29M), Q2 at SAR 34.9m (US$9M)

However, the report indicated that H1 2023 net profit declined 19% to SAR 108.7 million compared to the same period last year.

According to First Mills, the dip in net profit is attributable to interest costs which began appearing in First Mills’ financial statements in Q4 2022, following the completion of the merger with the parent company, Al Raha Al Safi, and the transfer of a loan to the Company which was contracted by the parent company.

Also, the company reports that the second-quarter net profit declined by SAR 26 million year-over-year to SAR 35 million. 

However, despite a dip in net profits, the net profit margin reached 23% and 17% for H1 2023 and Q2 2023 respectively, illustrating a robust bottom-line margin. 

“While we acknowledge the challenges to net profit in Q2 2023, we believe we have the suitable strategy and execution plan in place to deliver on our key projects such as the PESA Mill, the pre-mix plant, durum mill, and Mill C expansion in the Jeddah Plant which we collectively expect to increase our capacity, boost our product variety, and have a positive long term financial impact,” Ababtain said.

At the same time, Ababtain revealed that First Mills is actively managing costs to improve its financial position by reducing net debt and progressively deleveraging the balance sheet, allowing for greater financial flexibility to fund future endeavors.”

The company’s flagship flour business achieved a 7% rise in revenue for the first half, reaching SAR 274 million, with second-quarter revenue enjoying a 9% increase to SAR 124 million compared to the previous year. The bran business grew 32% in first-half revenue, reaching SAR 84 million, and 20% in second-quarter revenue to SAR 41 million. 

These gains helped offset the decline in feed revenue, which dropped 14% to SAR 111 million in the first half of 2023.

“Looking ahead, we are keen to explore various avenues for future growth,” Ababtain said.

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