Saudi Arabia’s Almunajem Foods Co. and Balady Poultry have signed a seven-year processing partnership and distribution agreement.
Almunajem Foods said in a stock exchange announcement that Balady Poultry will produce and package both companies’ branded poultry products for supply inside and outside Saudi Arabia under a profit-sharing agreement.
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Marketing and distribution will be carried out by Almunajem Foods.
Balady Poultry confirmed the transaction with an almost identical announcement with the exchange.
“No specific value has been determined” for the deal, according to Almunajem’s filing.
Almunajem Foods’ managing director Thamer Abdulaziz Abanumay has an “indirect interest in this agreement” in his position as vice chairman of the Balady Poultry board.
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By GlobalDataAbdullah Omar Bawazir, a board member of Almunajem Foods, also has a similar interest in Balady Poultry, according to the filings.
In November, Almunajem Foods announced that Bin Abdulaziz Abanumay had resigned as CEO of the company, effective from 31 December, after heading up the business for eight years. He would remain a board member.
Ali Hasan El Zain was named as the new CEO of Almunajem Foods from 1 January.
Meanwhile, both companies set out the nature of the poultry partnership: “The agreement aims to support continuous shared growth for both companies and increase the market share of locally produced products in the Saudi market with higher quality and improved operational efficiency.
“This partnership reflects strategic integration between the producer, Balady Poultry Company, and the marketer and distributor, Almunajem Foods Company, in order to achieve mutual objectives in the poultry sector.”
Almunajem Foods issued its third-quarter and year-to-date results in November.
Revenue for the three months to 30 September rose 2.2% to SR816.1m ($217.6mm).
However, operating profit fell 5.2% to SR36.4m and net profit dropped 21.7% to SR31.7m.
The increase in revenue was attributed to a rise in volumes across all categories despite a drop in average selling prices.
Nine-month revenue dipped 0.5% to SR2.51bn while operating profit decreased 46% to SR118.3m. Net profit was down 52% at SR102.7m.
Almunajem Foods supplies chicken, turkey, duck and quail. It owns the Dari brand. Balady Poultry produces and markets its namesake chicken brand.
Balady Poultry also issued its latest results in November for the same periods to 30 September.
Third-quarter revenue edged up 0.5% to SR218.9m but was down 4.9% year to date at SR634.1m.
Operating profit fell 67% for the quarter and was down 72% over the nine months at SR9.1m and SR26.2m, respectively.
Net profit dropped 74% for both reporting periods to SR7.4m and SR25.4m.
