Almarai Company SJSC Q4 2020 Earnings Call Transcript

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

Question: Adnan Farooq - Jadwa Investments - Analyst : Hi, good afternoon. Thank you for the presentation. And I have three questions. One is regarding the commodity prices. Given you have a large experience in commodity prices, how do you see the current movement with regards to your commodity prices? Do you see a sustained inflation in the commodities that you use, basically corn, soybeans, etc.? And how do you expect them to impact your margins going forward? That's the first question. The second question is around subsidies. You mentioned during the presentation that poultry net profit was impacted due to the subsidy changes. Our understanding was that the subsidy scheme had changed rather than elimination of subsidy. Can you please elaborate on that and maybe also touch upon how much impact do you expect from the going away of subsidies in 2021? And the last is the last question maybe, if you can comment (inaudible), during the fourth quarter the three main segments had a year-on-year decline in profitability, and only the other segment increased and supported profitability. How should we expect profitability going forward -- from different segments?

Question: Taher Safieddine - JPMorgan - Analyst : Good afternoon, gents. It's Taher from JPMorgan. Thank you very much for the call. A couple of questions from my side. Number one I think is just on the growth trend in Saudi down 1% year-over-year in Q4 after quite a solid nine months. I mean, can you just give us some read through? Are you seeing this VAT impact trickling through, ex-pats starting to leave the country? So, maybe just some color on that. And how should we think about moving into 2021 given that H1 was quite abnormal with people staying at home and house food consumption, pantry loading, all of these? I think this is the first question. The second question is just on the poultry, how should we think about the revenue mix moving into next year? Ideally as may be food-service comes back to normality we should expect some margin pressure. So, maybe if you can give us some color on where utilization is and how should the revenue mix trend into 2021. And I think finally just on the M&A -- been a subject talked about for quite some time. Is there anything tangible? Where do you want to see Almarai expanding? Is it going to be existing categories or potentially maybe new categories, given that some of your peers in the UAE like (inaudible) now seems to be on an M&A spree? So, does this concern you in terms of the competitive landscape? And does it put some pressure to deliver some M&A in 2021? That's it. Thank you.

Question: Saul Rans - Morgan Stanley - Analyst : (technical difficulty) sort of rough order of magnitude of the costs that you are incurring for COVID safety and infection prevention measures in your factories and so on.

Question: Saul Rans - Morgan Stanley - Analyst : Yes, so the first one was are you concerned about oversupply of raw milk with demand for dairy slowing? And the second one is anything you can tell us about the total cost you are incurring for COVID safety and infection prevention measures? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 26, 2021 / 1:00PM, 2280.SE - Q4 2020 Almarai Company SJSC Earnings Call

Question: Matthew Menezes - Millennium - Analyst : Thank you very much and thank you for the call this afternoon. Just a clarification on the soft commodity price of the corn and soybean and so on. If I understand it, you currently purchase forward. But with prices elevated now are you not purchasing forward so you are avoiding that direct REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 26, 2021 / 1:00PM, 2280.SE - Q4 2020 Almarai Company SJSC Earnings Call exposure? Or would we expect to see, I don't know if you are buying three or six months forward, but expect that that pricing will come through, so midyear? Is that how we should think about it?