Ukraine crisis raised costs and raised prices to mitigate the impact

Thank you for reading. Read the news: “Food Development” in Arabic: Ukraine’s crisis raised costs and increased prices to mitigate the impact

Basrawi News Encyclopedia – Books: Rania Muhammad / The Food Development Company recorded a decrease in profits by about 92% during the first quarter of this year, to reach one million and 540 thousand riyals.

The company explained that the decline in profits for the first quarter is due to the increase in sales costs by 23.4%, due to the large increase in the prices of raw materials and the continued increase in the company’s capacity.

In an interview with Al-Arabiya, Ahmed Asilan, board member and managing director of the Food Development Company, explained that the rise in raw materials began before the Ukrainian crisis since the last half of last year, but the situation between Russia and Ukraine deepened the problem, especially since the two countries are among the largest exporters of materials. Raw materials used in poultry production, such as corn and soy, have increased sales costs and the proportion of overheads.

He added that the company, in general, achieved sales of more than 435 million riyals, an increase of 18%, and 91 million riyals in total profit in the first quarter, and this is a good indication of the gradual recovery of gross profit and net profit compared to the last quarter, as well as sales.

He continued, “The rise in prices continues and is expected to continue in the coming period, but the company has taken various measures to address the problem. It has had a presence for 60 years in the Saudi market and its shares were listed less than a year ago. Since the pandemic period, it has taken certain measures, including gradually increasing prices and increasing Storage capacity from 3 to 6 months, in addition to saving on the feed mix provided to poultry, which would reduce the impact of high prices and gradually return the net profit to its normal path.

A member of the Board of Directors and Managing Director of the Food Development Company stated that the company had negative revenues in the last quarter at -23%, while in the current quarter it increased to +2%, and it is now on the path of correction.

He said that the increase in the prices of the company’s products will be reflected in the coming periods, and the net profit in terms of growth will be reconsidered, after the results of the corrections are released.

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