Saudi: Tanmiah reports 42.8% YoY increase in revenues in 2022

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Saudi Arabia - Tanmiah Food Company, a market-leading provider of fresh and processed poultry and other meat products, animal feed and health products, and a foods brand franchise operator, today announced a 42.8% year-on-year (YoY) increase in revenues to SAR 1,727.0 million ($460.53 million) for the full year ending December 31, 2022.

Gross margin substantially improved from 19.2% in FY2021 to 24.3%, while EBITDA of SAR 220.3 million (+142.5% YoY) yielded a margin of 13%. Net profit attributable to owners of the company increased significantly from SAR 13.6 million to SAR 186.8 million, according to a statement.

This increase is due to a one-off gain amounting to SAR 101.9 million recorded in the income statement, resulting from the Tyson transaction, which involved acquisition of a 60% equity stake in Supreme Foods Processing Company (SFPC). As per the applicable accounting standards, this business is now classified as discontinued operations. The gain due to the acquisition of the 15% stake in Agricultural Development Company Limited (ADC) by Tyson amounting to SAR 74 million, was recorded directly in equity.

Zulfiqar Hamadani CEO of Tanmiah, commented: “We are pleased to announce that Tanmiah has ended the year on a solid note, with a robust set of financial results. This significant achievement is credited to continued operational excellence, the current operating environment that is conducive to growth, our ongoing capacity expansion, and the trust our customers have continued to place in us.

Reflecting on the critical milestones for Tanmiah during 2022, we completed the strategic partnership with Tyson Foods, which will help consolidate our position as the region’s leading poultry producer. This is also set to pave the way for a wealth of potential growth opportunities and generate enormous value for our shareholders as we gain access to cutting-edge production techniques and cost efficiencies.

We are eager to begin the next phase of Tanmiah’s exciting journey. Our focus on operational excellence, sustainable food production and providing high-quality products within the Kingdom and abroad is unwavering. We are proud to be at the forefront of innovation and growth in our industry and will continue to cater to the evolving demands of our customers with the same dedication.”

Ahmed Osilan, Managing Director of Tanmiah said:

“We are marking the close of yet another very successful year for Tanmiah, as our focused strategy continued to bear fruit, with the strengthening of our partnerships, advances in our market share, and a sustained growth momentum for our business. Our commitment to food security and self-sufficiency, as well as our focus on best practices in production and sustainability, has indeed positioned us as a leading player in the regional food sector.

We remain committed to supporting the transformative initiatives under the Vision 2030 umbrella and are grateful for the remarkable opportunities for our industry, that are continuing to emerge. We look forward to further promote Tanmiah as a “Halal and Saudi Made” brand that sets the standard for quality, innovation, and sustainability in the domestic and overseas markets. At Tanmiah, we prioritize generating long-term returns for our shareholders by capitalizing on our solid market positioning, fully-integrated business model, and favorable market dynamics.”

Revenue Analysis

Tanmiah announced full year 2022 revenues of SAR 1,727.0 million, up 42.8% YoY from SAR 1,209.6 million in 2021. The enhanced topline performance was predominantly due to the increase in sales volumes across the company’s portfolio of product and service lines, particularly fresh poultry, feed and animal health segments.

Fresh Poultry sales, the most significant contributor to Tanmiah’s revenues (84.7%), increased 35.6% YoY in FY22 to SAR 1,462.9 million from SAR 1,078.7 million last year. The segment’s positive performance continues to be driven by Tanmiah’s capacity expansion, which is supported by wide-ranging transformative government programs targeted towards boosting poultry production, as well as an increase in demand for fresh poultry in the domestic market. The Group’s daily capacity increased from 370,000 birds per day to 456,000 birds per day as at 31 December 2022.

Animal Feed and Health revenues grew by 79.8% YoY to SAR 234.5 million from SAR 130.4 million, predominantly due to increased demand for animal health products and equipment.

Food franchise operator revenues amounted to SAR 29.6 million in FY22, which represents the first full year since the launch of the Company’s food franchise vertical. During the year, Tanmiah opened 16 POPEYES stores in the Kingdom, bringing the total to 20 operational outlets as of 31 December 2022.

Further Processed Products revenues grew by 10% YoY, displaying steady growth. This business is operated by SFPC. As part of the Tyson Foods transaction, an equity stake of 60% of SFPC was acquired by Tyson. Tanmiah’s financial statements for FY22 are presented to reflect this as discontinued operations of the Group.

Income Statement Analysis

Cost of Sales increased 33.7% YoY to SAR 1,306.9 million in FY22, compared to SAR 977.8 million in FY21, as a result of the Company’s expansion of production capacities, complemented with a rise in sales volumes during the year. Nevertheless, gross profit increased by a remarkable 81.3% YoY to SAR 420.2 million, from SAR 231.8 million, in line with the continued rise in sales volumes and margin recovery as well as enhanced utilization of assets, and greater operational efficiencies.

EBITDA increased substantially to SAR 220.3 million in FY22, compared to SAR 90.85 million in FY21, despite the 38.9% YoY rise in selling, general, and administrative expenses.

Net Profit attributable to the owners of the company jumped from SAR 13.6 million in FY21 to SAR 186.8 million, primarily the result of the one-off gain of SAR 101.9 million.

Balance Sheet Analysis

Tanmiah’s cash position remarkably improved by 44% YoY from SAR 185.9 million to SAR 267 million as of 31 December 2022.

Total borrowings reduced to SAR 308.4 million, from SAR 323 million at the end of December 2021.

Capex increased from SAR 122.2 million in FY21 to SAR 160.5 million in FY22. The planned capital expenditure in the next few years will focus on ramping up feed milling and primary processing capacities, enabling the Company to seize new growth opportunities.

Growth Strategy

The company is strongly positioned to embark on a new phase of growth and development, aided by expansion across all stages of the value chain and access to new geographies that will enable Tanmiah to unlock multiple opportunities in the fast-growing global Halal food market. This collaboration is set to accelerate the company’s growth and reinforce its commitment to the Kingdom’s objectives of food security and self-sufficiency, whilst bringing world-class industry know-how to the domestic market, the company statement said.