Savola misses Q4 estimates as revenues decline: Al Rajhi Cap

Savola Group reported a net loss of SAR 526.7 million in the fourth quarter of 2018 missing Al Rajhi Capital estimates of net profit of SAR 161 million.

Weak operating performance and some non-recurring items led to the miss, the brokerage firm said in a report.

Revenue declined 7.7 percent year-on-year (YoY) to SAR 5.35 billion in line with Al Rajhi’s estimates of SAR 5.28 billion, mainly due to decline in prices of edible oil, sugar and currency devaluation (Iranian Rial, Sudanese Pound and Turkish Lira).

Gross profit declined 14 percent YoY to SAR 991 million in line with SAR 1 billion estimated by the brokerage firm, due to margin decline in food segment.

For 2019, the company expects SAR30 million positive impact on EBITDA from the closure of 123 Pandati stores.

“We think this as a prudent step towards improving profitability which is in line with the management’s expectations of EBITDA break even in 2019,” the report noted.

Al Rajhi Capital maintained its “neutral” rating on the stock revising the target price lower to SAR 25 per share.