First Mills reports a 30.4% increase in Q2 2024 earnings, driven by solid sales growth

SAUDI ARABIA—First Milling Co. (First Mills) reported a remarkable performance in the second quarter of 2024, achieving a 30.4% year-on-year (YoY) increase in earnings, which amounted to SAR 45.51 million (US$12.29 million) compared to SAR 34.91 million (US$9.43 million) in Q2 2023.

The company also saw a significant improvement in its net profit margin, rising from 15.1% in Q2 2023 to 18.8% in Q2 2024.

In an interview with the Argaam, Abdullah Ababtain, CEO of First Mills, attributed this robust performance to substantial sales growth across all product categories, notably a 21% increase in sales of small-package products.

“These gains are the result of our relentless efforts to enhance the presence of our products in new regions, leading to an improved product mix and higher profit margins. We will continue to work towards even more success in the future,” said Ababtain.

Key Drivers of Revenue Growth

The company achieved a 13.3% YoY revenue hike in Q2 2024, driven by strong growth across all product categories. The feed segment led the way with a 36.3% increase in sales, fueled by rising demand and the introduction of a new product range in the poultry feed market.

Flour and bran sales also grew by 6.7% and 5.5%, respectively, thanks to the successful strategy of diversifying the customer base and expanding geographical coverage across the Kingdom.

Despite the impressive annual growth, First Mills’ earnings declined quarterly, primarily due to seasonal factors.

“While Ramadan sales saw higher demand for flour products, this surge is often followed by a notable decrease in consumption patterns in the subsequent quarter, affecting the overall demand for flour and related products,” Ababtain explained.

First Mills operates four plants across Saudi Arabia, with a total milling production capacity of 4,900 tons per day (tpd) of flour, following the recent addition of 250 tpd for Mill C at the Jeddah plant.

The company also has feed mixing capacities of up to 900 tpd. The expansion of Mill A at the Jeddah plant, set to be completed in Q4 2024, will further increase wheat milling capacity by 250 tpd.

Impact of Operational Capacity Upgrades

The expansion of Mill C has already shown positive results, contributing to a 21% YoY growth in sales of small-package products in Q2 2024.

This has enhanced the product mix and profit margins. “We look forward to further augmenting our production capacity with the upcoming expansion of Mill A, which will add another 250 tpd for wheat milling without affecting sales,” Ababtain noted.

First Mills has strategically diversified its product offerings, launching the PESA Mill and the Pre-Mix Plant in Q3 2023, and commencing operations of the Kingdom’s first Durum Mill at the Jeddah plant in Q4 2023.

These projects are expected to strengthen revenues and profits by expanding into high-margin segments. The sales of small-package products, which rose by 21% YoY in Q2 2024, now account for 11% of the company’s flour product sales, reflecting improved margins for the quarter.

Outlook for Q3 2024

Looking ahead to the third quarter of 2024, First Mills expects to continue achieving outstanding results and executing its strategic expansions into new high-margin segments.

“We are confident that our strategy will bolster revenues and profits, further solidifying our market position,” Ababtain noted.

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