Mubasher: Albilad Capital said that Savola's second quarter net profits missed estimates of SAR 286 million and the average analysts' estimate of SAR 328 million, after the company’s unaudited net earnings declined by 43% to SAR 247 million in Q2-16 from SAR 434 million in Q2-15.
Therefore, the share valuation of Savola Group is downgraded to SAR 43.8 from SAR 49.8, according to a recent report.
“The decrease in net profit versus Q2 2016 was triggered by lower margins in the food and retail segments, increased operating expenses associated with the expansion of retail outlets and a new distribution center in the western region,” Albilad Capital said.
On a semiannual level, results of the first half this year included a gain capital of SAR 265 million from the sale of the plastic segment.
“Savola’s first-half performance reflected higher operating expenses and exacerbating forex losses,” the report said.
Revenues reached SAR 6.89 billion in Q2-16, 2.1% down from SAR 7.04 billion in Q2-15 as the sales of the food sector slumped by 8% whist retail revenues stretched by 2.4%.
“The semiannual sales fell 2.6% totaling SAR 12.9 billion with the food and retail segment posting sales of SAR 5.9 billion and SAR 7.1 billion, respectively, with the former edging down by 8.3%, while the latter increased by 2.5%. The food segment bottom line culminated at SAR 341 million in H1 2016 down from SAR 343 million in H1 2015. The retail segment incurred a net loss of SAR 101 million in H1 2016 compared to net profit of SAR 67 million in the comparable period,” it added.
