Almarai Company SJSC Q2 2023 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Taher Safieddine - JPMorgan Chase & Co, Research Division - Analyst : Two questions from my side. I think the first question is really on the margins. I mean -- you've increased your product prices. We're starting to see a margin -- consistent margin improvement year-over-year when it comes to the gross and the EBIT level than (inaudible). But I guess the question is, with the next couple of quarters, maybe you're realizing the benefits of higher -- of, sorry, lower commodity costs. I mean, how should we think about the margin profile? I mean, is it fair to assume that we go back to a 17%, 18% EBIT margin, if you want to talk EBIT margins or maybe go back to the gross margin levels that we've seen somewhat closer to 36%. I just want to understand what's the magnitude if the forward curves are indicating significant drop in commodity cost and you've already increased your prices? I mean, how significant is the upside when it comes to operating margins, assuming everything else remains as is, no geopolitics events of any sort? So this is my first question. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 19, 2023 / 12:00PM, 2280.SE - Q2 2023 Almarai Company SJSC Earnings Call

Question: Taher Safieddine - JPMorgan Chase & Co, Research Division - Analyst : All right. No, that's clear. I think just the second question. This is very clear, thank you -- is on the long life dairy. I mean you've been talking about potentially becoming a market leader in that space. We know your direct competitor is there at #1, solid #1. You are actually, again, a #2 player. But looking at the H1 revenue growth, negative 3%. I mean, is it market share losses? Is it maybe the overall market is shrinking because we've been seeing and you've been talking about maybe substitution from fresh to long life, price increases have happened across both categories. So maybe just a better clarity on what is driving really this decline in that category? And how should we think about your strategy in long life dairy maybe over the next 2 years?