Riyadh – Mubasher: Al Rajhi Capital said that the Saudi retail sector contributed to the majority of Savola Group’s underperformance in 2016, while food segment profitability declined relatively lower, owing to its defensive nature.
The research firm placed Savola “under review” and look to revise the estimates and rating post the earnings, adding that its earlier estimate on the company was “Neutral” with target price of SAR 37.4 per share.
Savola announced it had incurred of SAR 964.3 million in Q4-16 against profits of SAR 515.3 million ($137.38 million) in the year-ago period.
Net profit was also impacted by lower share of income from associate, higher financial charges and higher losses in United Sugar Company Egypt (USCE), the report said.
For USCE, which is an indirect subsidiary of Savola, the shareholders agreement with European Bank for Reconstruction and Development (EBRD) and other legal formalities will be completed in Q1 2017, post which Savola will account for USCE investment on equity basis, Al Rajhi Capital reported.
