NCB Capital remains ‘neutral’ on Almarai after Q4 results

NCB Capital maintained its "neutral" rating on Almarai Company, setting the 12-month price target at SAR 42.2 a share, as the company’s poultry segment reported higher profitability, the brokerage firm said on Sunday.

While declining profits in other segments due to weak market conditions could weigh on overall earnings, the consultancy said the improving performance of the poultry business along with production efficiencies and cost optimization hold the key to future earnings growth.

On Sunday, Almarai said Q4 2017 net profit slipped 4.3 percent to SAR 513 million, as net income fell 4.3 percent to SAR 513 million due to weak sales and impairment of assets in Jordan. However, the net income remained in line with NCB Capital and consensus estimate of SR531 million and SR527 million, respectively.

The brokerage firm said though sales declined 2.6 percent year-on-year to SR3.42 billion, remaining in line with its forecast, despite falling due to weakness in the premium dairy and juice products, and depreciating Egyptian Pound. 

It estimated sales of the poultry segment increasing 3.2 percent to SAR 378 million, supported by lower mortality rates, higher customs duties on imported poultry and banning Brazilian poultry imports.