The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Adnan Farooq - Jadwa Investment Company, Research Division - Analyst
: I have 3 questions. The first 1 is regarding the Poultry segment. The margins declined quarter-on-quarter. I'm assuming that's because of the change
in mix between Retail and Foodservice segment. Can you tell us how was the contribution of the Retail segment in the third quarter as compared
to how it was in the first quarter and second quarter? This is the first question.
The second question is on your export markets, which export markets have led to this growth in export sales? And how much of the growth in
food and long-life milk segment was driven by these export markets?
And third and the last question is regarding your strategy in Oman, given the new competitor. I understand that how are you planning to make
up for the decline? Or do you think it will be difficult for you to recapture the market share that you have lost?
Question: Adnan Farooq - Jadwa Investment Company, Research Division - Analyst
: Yes. Just to follow-up on the question #2. So food sales are driven by core markets and long-life sales growth is driven by export markets. Is that
correct? Or is it both food and long-life growth, both are driven by Iraq?
Question: Taher Safieddine - JPMorgan Chase & Co, Research Division - Analyst
: This is Taher from JPMorgan. A couple of questions from my end. Number one, can we get just some color on what's happening in the long life
data market? I mean, your revenue growth is quite impressive. Are you seeing -- I mean, the substitution maybe away from fresh, clearly, long life
has been growing at a faster growth rate than fresh. How is the promotional or the pricing environment? Are you seeing any aggressive promotions
there? That's my first question within products.
My second question is on the poultry. I mean, what's the strategy into 2021? We understand there's some CapEx or capacity coming through, but
is the focus still to push through the retail channel at the expense of food service? So that's on the product.
And my second question is on the costs. Is it fair to assume that starting next year, these incremental costs from expat levies, alfalfa will start to
wind down? And potentially maybe could support your operating margins? And given it's been 3 years that we've been struggling with cost inflation
from different items. So that's my second question.
And finally, on the free cash flow, the story keeps getting better and better. Today, Almarai is a 6% free cash (inaudible) something that, I mean, at
least for me, I haven't seen in a very long time. What does open the door or maybe put pressure on management to further pursue M&A, given
that organic growth seems more or less to be relatively muted, especially if we're going into a tough 2021?
I mean, just any thoughts on how do you look at M&A? Is it expanding into geographies, product categories? I'll leave it there.
Question: Taher Safieddine - JPMorgan Chase & Co, Research Division - Analyst
: Yes. We just lost you at the poultry question.
Question: Taher Safieddine - JPMorgan Chase & Co, Research Division - Analyst
: Okay. But just to understand, sorry, (inaudible) levies will wined -- will taper off after this year, right? I mean, in terms of increases, there's nothing
beyond 2020?
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