Saudi Arabia  -  First Milling Company, a market-leading Saudi milling company, has announced its financial performance for the first nine months (9M) and third quarter (Q3) of 2023.

Abdullah Ababtain, Chief Executive Officer of First Mills, said, "First Mills delivered a solid set of results for the first nine months of 2023G, in spite of the challenging market environment. Our core business is diversified and robust, and we are actively improving efficiencies to expand margins.

Our downstream businesses that we continue developing will start boosting in the last quarter of 2023G such as the launch of our PESA Mill and Mixing Plant, with more to come in 2024G from the commissioning of our Durum Mill and Mill-C Upgrade.

Our stable revenues, double digit margins, and clear growth path tell me that First Mills is on the right track towards long term value creation for our shareholders and all related stakeholders.”

FINANCIALS

First Mills achieved a 4.5 per cent year-on-year (YoY) revenue growth in 9M 2023G, generating SAR 718 million.

This topline growth is attributed to its largest product segment, flour, growing by 8 per cent in compared to last year, supported by 7 per cent growth in bran revenue, reflecting the Company’s successes in acquiring new customers and increasing its geographic coverage.

Even in Q3 2023G, revenue grew 4.3 per cent YoY driven by the net revenue growth in flour by 10 per cent and feed by 16 per cent.

However, Q3 2023G bran revenue declined 30 per cent YoY due to prioritising the increase of intake in the feed production driven by the feed growth.

First Mills’ Q3 2023G capacity utilisation was 97.2 per cent, increasing by 7 per cent compared to the same period of last year.

The Company closed 9M 2023G with gross profit of SAR 308.5 million, flat over the same period last year reflecting robust business performance.

Net profit for 9M 2023G was SAR 162.7 million and for Q3 2023G was SAR 54 million, declining 17.5 per cent and 14.9 per cent YoY, respectively.

This change was driven by the application of the financing costs related to the long-term financing arrangement that was part of the merger with the parent company "Al Raha Al Safi” and began being recorded in the Company’s books on 15 September 2022G.

Excluding the impact of interest cost, the like-for-like profit is in line with the same period last year.

Moreover, the Company has identified growing demand for its products in new geographical areas, and as such has increased its selling and distribution costs to accommodate this increased demand.

However, operating expenses maintained the same levels as previous periods as a result of re-adjusting and managing general, administrative and other expenses.

Despite that, 9M 2023G and Q3 2023G net profit margin were 22.7 per cent and 21.8 per cent, respectively, reflecting a healthy bottom-line financial performance.

OPERATIONS

First Mills gains from both its diversified product portfolio and geographic presence covering all major regions of the Kingdom.

The Company produces flour and bran from its Jeddah, Qassim, Tabuk, and Al Ahsa plants, and produces feed from its Jeddah and Qassim plants.

The Company expects promising upside from two significant avenues.

Firstly, for its core business, by optimising cost and production dynamics to achieve economies of scale as its geographic reach and product diversification enable this ambition.

Secondly, its further expansion into new downstream business segments that should start contributing yield growth and increase the Company's market share, as such, require Capex and Opex support.

Specifically, the Company is actively working on four projects that will drive this expansion of its Aloula retail brand: PESA Mill, Pre- Mix Plant, Durum Mill, and Jeddah Mill-C Upgrade.

SHAREHOLDER VALUE

In Q3 2023G, First Mills generated a robust Free Cash Flow (FCF) of SAR 188 million with an FCF Conversion Rate of 76 per cent, reflecting the Company’s ability to efficiently allocate capital and optimise cash flow from its core business.

Moreover, the strategic increase in CAPEX to SAR 72 million in 9M 2023G provides a solid foundation towards its downstream expansion aspirations.  

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