Q3 2026 Almarai Co Ltd Earnings Call

October 6, 2026

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Speaker #5: Good afternoon, everyone. This is Farhad Irfan from Sell-side Research at Al Jazeera Capital. On behalf of Al Jazeera Capital, it is my pleasure to welcome you all to Almarai’s earnings call for Q3 2026.

Fahad Irfan: Good afternoon, everyone. This is Fahad Irfan from Sell-Side Research at Aljazira Capital. On behalf of Aljazira Capital, it is my pleasure to welcome you all to Almarai's earnings call for Q3 2026. I am pleased to welcome our panelists on the call today. Amongst our panelists, we have Mr. Fawaz Aljasser, the Chief Executive Officer, Mr. Ikram Ul Haq, Chief Financial Officer, and Mr. Abdulhadi Alamri, Head of Investor Relations, Governance, and Compliance. We will start the call with the management before opening the floor for participants for the Q&A session. I will start by handing over to the Head of Investor Relations, Mr. Abdulhadi. Mr. Abdulhadi, the mic is yours.

Fahad Irfan: Good afternoon, everyone. This is Fahad Irfan from Sell-Side Research at AlJazira Capital. On behalf of AlJazira Capital, it is my pleasure to welcome you all to Almarai's Earnings Call for Q3 2026. I am pleased to welcome our panelists on the call today. Amongst our panelists, we have Mr. Fawaz Aljasser, the Chief Executive Officer, Mr. Ikram Ulhaque, Chief Financial Officer, and Mr. Abdulhadi Alamri, Head of Investor Relations, Governance, and Compliance. We will start the call with the management before opening the floor for participants for the Q&A session. I will start by handing over to the Head of Investor Relations, Mr. Abdulhadi. Mr. Abdulhadi, the mic is yours.

Speaker #5: I am pleased to welcome our panelists on the call today. Among our panelists, we have Mr. Fawad Al Jasser, the Chief Executive Officer; Mr. Ikram Al Haq, Chief Financial Officer; and Mr. Abdul Hadi Al Amri, Head of Investor Relations, Governance, and Compliance.

Speaker #5: We will start the call with the management. Before opening the floor for participants for the Q&A session, I will start by handing over to the Head of Investor Relations, Mr. Abdul Hadi.

Speaker #5: Mr. Abdul Hadi, the mic is yours.

Speaker #6: Good afternoon, everyone, and thank you for joining Almarai’s third quarter 2026 earnings call. This is Abdul Hadi Al Amri, Head of Investor Relations at Almarai.

Abdulhadi Alamri: Good afternoon, everyone, and thank you for joining Almarai's Q3 2026 earnings call. This is Abdulhadi Alamri, Head of Investor Relations at Almarai. I am joined today by our CEO, Mr. Fawaz Aljasser, and our CFO, Mr. Ikram Ul Haq. Thank you as well to Aljazira Capital for hosting the call and to Fahad Irfan for moderating today's session. Our Q3 2026 earnings presentation is available on Almarai website, and we will take you through the key developments in the business and our financial performance before opening the floor for Q&A. Before we begin, I would ask everyone to take note of the disclaimer, especially the sections relating to the forward-looking statements, underlying assumptions, and potential risks. Our comments today should be considered alongside Almarai's published financial statements and regulatory disclosures.

Abdulhadi Alamri: Good afternoon, everyone, and thank you for joining Almarai's Q3 2026 Earnings Call. This is Abdulhadi Alamri, Head of Investor Relations at Almarai. I am joined today by our CEO, Mr. Fawaz Aljasser, and our CFO, Mr. Ikram Ulhaque. Thank you as well to AlJazira Capital for hosting the call and to Fahad Irfan for moderating today's session. Our Q3 2026 earnings presentation is available on Almarai website, and we will take you through the key developments in the business and our financial performance before opening the floor for Q&A.

Speaker #6: And I am joined today by our CEO, Mr. Fawad Al Jasser, and our CFO, Mr. Ikram Al Haq. Thank you as well to Al Jazeera Capital for hosting the call, and to Farhad Irfan for moderating today's session.

Speaker #6: Our Q3 2026 earnings presentation is available on the Almarai website. We will take you through the key developments in the business and our financial performance.

Speaker #6: Before opening the floor for Q&A, and before we begin, I would ask everyone to take note of the disclaimer, especially the sections relating to forward-looking statements, underlying assumptions, and potential risks.

Abdulhadi Alamri: Before we begin, I would ask everyone to take note of the disclaimer, especially the sections relating to the forward-looking statements, underlying assumptions, and potential risks. Our comments today should be considered alongside Almarai's published financial statements and regulatory disclosures. With that, I will hand it over to Ikram to take us through Almarai's performance for Q3 and the first nine months of 2026.

Speaker #6: Our comments today should be considered alongside Almarai’s published financial statements and regulatory disclosures. With that, I will hand it over to Ikram to take us through Almarai’s performance for the third quarter and the first nine months of 2026.

Abdulhadi Alamri: With that, I will hand it over to Ikram to take us through Almarai's performance for Q3 and the first nine months of 2026.

Speaker #6: Thank you very much, Abdul Hadi. Shukran, Jazeera, and Assalamualaikum. Good afternoon to all. Let us get straight into the Q3 performance, which was an excellent quarter.

Ikram Ul Haq: Thank you very much, Abdulhadi. Shukran jazilan and salam alaikum, and good afternoon to all. Let us get straight into the Q3 performance, which was an excellent quarter. If we can go to market dynamics. Thank you. So we go to slide 5. It is good to see number one on the right-hand side for all the five core categories. Alhamdulillah, as you can see, Almarai is number one in dairy, juice, food, bakery, and poultry as well. If you remember last quarter, we talked about food category, where we have a temporary adjustment. It is good to see back our number one position and happy to report that everything is going well in that respect. With that said, I would like to move to next slide, which are our innovation for Q3.

Ikram Ulhaque: Thank you very much, Abdulhadi. [Foreign language] and As-salamu alaykum, and good afternoon to all. Let us get straight into the Q3 performance, which was an excellent quarter. If we can go to market dynamics. Thank you. So we go to slide 5. It is good to see number one on the right-hand side for all the five core categories. Alhamdulillah, as you can see, Almarai is number one in dairy, juice, food, bakery, and poultry as well. If you remember last quarter, we talked about food category, where we have a temporary adjustment. It is good to see back our number one position and happy to report that everything is going well in that respect. With that said, I would like to move to next slide, which are our innovation for Q3.

Speaker #6: If we can go to market dynamics—thank you. Let's move to slide number 5. It's good to see number one on the right-hand side for all the five core categories.

Speaker #6: Alhamdulillah, as you can see, Almarai is number one in dairy, juice, food, bakery, and poultry as well. If you remember, last quarter we talked about the food category, where we had a temporary adjustment.

Speaker #6: It's good to see back our number 1 position, and happy to report that everything is going well in that respect. With that said, I would like to move to next slide, which are innovation for the third quarter.

Speaker #6: And I trust that virtually all of you have tried at least two, if not three or more, of the new innovations this quarter. As you can see, the exciting range of iced tea, mussel milk, and you can see the new categories within breast fillet, and new flavor extensions in poultry as well.

Ikram Ul Haq: I trust that virtually all of you have tried at least two, if not three or more, of the new innovations this quarter. As you can see, the exciting range of Ice Tea, Muscle Milk, and you can see the new categories within breast filet and new flavor extension in poultry as well. As much as they are great from a consumer perspective, I am double pleased as a CFO. As you can see, most of them or all of them are very positive, both from a margin and a pricing perspective. So you can see Almarai portfolio is getting revamped towards a more improved margin and creative portfolio. With that said, let me now move to the Q3 performance. If you can go to slide 8. Let us go through the key highlights for the quarter. I will start from the top left-hand side, and I will go in a one-line direction.

Ikram Ulhaque: I trust that virtually all of you have tried at least two, if not three or more, of the new innovations this quarter. As you can see, the exciting range of Ice Tea, Muscle Milk, and you can see the new categories within breast filet and new flavor extension in poultry as well. As much as they are great from a consumer perspective, I am double pleased as a CFO. As you can see, most of them or all of them are very positive, both from a margin and a pricing perspective. So you can see Almarai portfolio is getting revamped towards a more improved margin and creative portfolio. With that said, let me now move to the Q3 performance. If you can go to slide 8. Let us go through the key highlights for the quarter. I will start from the top left-hand side, and I will go in a one-line direction.

Speaker #6: As much as they are great from a consumer perspective, I'm doubly pleased as a CFO. As you can see, most of them—virtually all of them—are very positive, both from our margin and our pricing perspective.

Speaker #6: So you can see Almarai's portfolio is being revamped toward a more improved margin and creative portfolio. With that said, let me now move to the Q3 performance.

Speaker #6: If we can go to slide 8, let’s go through the key highlights for the quarter. I’ll start from the top left-hand side, and I’ll go in a one-line direction.

Speaker #6: Let me start with revenue first—11% growth year-on-year. Double-digit growth during a crisis, which has engulfed the whole region. Remarkable performance, and the good thing about this quarter is that the growth is coming positively in all categories, all countries, and all channels.

Ikram Ul Haq: Let me start with revenue first. 11% growth year-on-year. Double-digit growth during a crisis which has engulfed the whole region. Remarkable performance. The good thing about this quarter that the growth is coming positively in all categories, all countries, and all channels, which is a great result achieved by Almarai during this quarter. I will elaborate for each of these three dimensions in the next slides. So let me move to the operating profit first. It is excellent to see, again, a green number, positive growth 3%, despite all the challenges we are facing of higher cost of feed importation, energy inflation in the region, transportation cost in general, and ramp-up costs, mainly in the protein business. I will touch base on that during the revenue section. Abdulhadi will elaborate on that when he talks about the financial performance. Net income is also positive year-on-year.

Ikram Ulhaque: Let me start with revenue first. 11% growth year-on-year. Double-digit growth during a crisis which has engulfed the whole region. Remarkable performance. The good thing about this quarter that the growth is coming positively in all categories, all countries, and all channels, which is a great result achieved by Almarai during this quarter. I will elaborate for each of these three dimensions in the next slides. So let me move to the operating profit first. It is excellent to see, again, a green number, positive growth 3%, despite all the challenges we are facing of higher cost of feed importation, energy inflation in the region, transportation cost in general, and ramp-up costs, mainly in the protein business. I will touch base on that during the revenue section. Abdulhadi will elaborate on that when he talks about the financial performance. Net income is also positive year-on-year.

Speaker #6: This is a great result achieved by Almarai during this quarter. I'll elaborate on each of these three dimensions in the next slides. So let me move to the operating profit first.

Speaker #6: It's excellent to see a gain—a green number, positive growth, 3%. Despite all the challenges we are facing: higher cost of feed importation, energy inflation in the region, transportation costs in general, and a ramp-up of costs, mainly in the protein business.

Speaker #6: I'll touch base on that during the revenue section. Abdul Hadi will elaborate on that when he talks about the financial performance. Net income is also positive year-on-year.

Speaker #6: The decline compared to operating profit is purely because of a higher funding balance, which we are retaining due to the water acquisition from last year. Let me now go through the balance sheet and cash flow highlights.

Ikram Ul Haq: The decline compared to operating profit is purely because of higher funding balance, which we are retaining because of our acquisition from last year. Let me now go through balance sheet and cash flow highlights. Working capital. We are now exceeding SAR 5 billion in working capital. Virtually all of it is coming from inventory. Inventory is up by nearly SAR 1 billion, which is by choice, done knowingly. We are now carrying more than 106 days of stock on average, but this, during the conflict, has become a great source of stability and resilience for Almarai. We will balance the number of days, and we will adjust as the conflict unwinds. Second is CapEx. You can see last quarter we spent SAR 1 billion, and this quarter is SAR 859 million.

Ikram Ulhaque: The decline compared to operating profit is purely because of higher funding balance, which we are retaining because of our acquisition from last year. Let me now go through balance sheet and cash flow highlights. Working capital. We are now exceeding SAR 5 billion in working capital. Virtually all of it is coming from inventory. Inventory is up by nearly SAR 1 billion, which is by choice, done knowingly. We are now carrying more than 106 days of stock on average, but this, during the conflict, has become a great source of stability and resilience for Almarai. We will balance the number of days, and we will adjust as the conflict unwinds. Second is CapEx. You can see last quarter we spent SAR 1 billion, and this quarter is SAR 859 million.

Speaker #6: Working capital. We are now exceeding $5 billion in working capital; virtually all of it is coming from inventory. Inventory is up by nearly $1 billion.

Speaker #6: Which is by choice, done knowingly. We're now carrying more than $106 million of stock on average. But this, during the conflict, has become a great source of stability and resilience for Almarai.

Speaker #6: And we will balance the number of days and will adjust as the conflict unwinds. Second is capex. You can see last quarter we spent $1 billion, and this quarter is $859 million.

Speaker #6: The reduction of $143 million is consistent with the last three quarters. As you will see, the same reduction will carry through for the next four or five quarters to come as well.

Ikram Ul Haq: The reduction of SAR 143 million is consistent with the last three quarters, and you will see the same reduction going through for the next four or five quarters to come as well. I will talk on that more when we talk of balance sheet at the end of the deck. Free cash flow looks very positive, SAR 1 billion plus. If you remember, in Q3 2025, Almarai bought the water business for around SAR 1 billion. The benefit of the current quarter is that it becomes normalized. We are free cash flow positive. Even though we are paying more in working capital, the reduction in CapEx allows us to report a positive free cash flow. If you can go to the next slide, where you will see the growth by each country.

Ikram Ulhaque: The reduction of SAR 143 million is consistent with the last three quarters, and you will see the same reduction going through for the next four or five quarters to come as well. I will talk on that more when we talk of balance sheet at the end of the deck. Free cash flow looks very positive, SAR 1 billion plus. If you remember, in Q3 2025, Almarai bought the water business for around SAR 1 billion. The benefit of the current quarter is that it becomes normalized. We are free cash flow positive. Even though we are paying more in working capital, the reduction in CapEx allows us to report a positive free cash flow. If you can go to the next slide, where you will see the growth by each country.

Speaker #6: I'll talk more about that when we discuss the balance sheet at the end of the deck. Free cash flow looks very positive—over $1 billion.

Speaker #6: If you remember, in Q3 2025, Almarai bought the water business for around $1 billion. The benefit in the current quarter is that it becomes normalized.

Speaker #6: We have positive free cash flow. And even though we are paying more in working capital, the reduction in capex allows us to report a positive free cash flow.

Speaker #6: If I can go to the next slide. When you see the growth by each country, you can see the top two countries, KSA and Egypt, contributing more than $100 million each by themselves.

Ikram Ul Haq: You can see the top 2 countries, KSA and Egypt, contributing more than SAR 100 million each by themselves. In total, Almarai is reporting more than SAR 635 million. Each country has their own different channel and product dynamics, but it is good to see positive number for every single one of the countries where we operate in. If I go to the same growth vector by product categories, I will take a bit more time there. If you can go to slide 10, please. First one, fresh dairy. After the adjustment done in May, you can see the Q3 number remains very positive, and we are very happy to see a normalized trading condition continued for the fresh dairy. Protein was another excellent quarter from a quantity point of view. Almarai produced 87 million birds, same number of birds we did in Q2.

Ikram Ulhaque: You can see the top 2 countries, KSA and Egypt, contributing more than SAR 100 million each by themselves. In total, Almarai is reporting more than SAR 635 million. Each country has their own different channel and product dynamics, but it is good to see positive number for every single one of the countries where we operate in. If I go to the same growth vector by product categories, I will take a bit more time there. If you can go to slide 10, please. First one, fresh dairy. After the adjustment done in May, you can see the Q3 number remains very positive, and we are very happy to see a normalized trading condition continued for the fresh dairy. Protein was another excellent quarter from a quantity point of view. Almarai produced 87 million birds, same number of birds we did in Q2.

Speaker #6: In total, Almarai is reporting more than $635 million. Each country has its own different channel and product dynamics, but it's good to see positive numbers for every single one of the countries where we operate.

Speaker #6: If I go to the same growth vector, by product categories, I'll take a bit more time there. If you can go to slide number 10, please.

Speaker #6: First one, fresh dairy. After the adjustment done in May, you can see the Q3 number remained very positive, and we're very happy to see normalized trading conditions continued for the fresh dairy.

Speaker #6: Protein was another excellent quarter from a quantity point of view. Almarai produced 87 million birds—the same number of birds we did in Q2. So that growth, the added capacity, is on full scope, and it's doing very well in distributing to the market.

Ikram Ul Haq: So that growth, the added capacity, is in full scope and is doing very well in distributing to the market. Fruit juice, again, remarkable is on 19%. I will take a turn this time, fruit juice and long-life dairy. Virtually half the growth in both categories is coming from Egypt. Egypt is doing very well in that respect in all 3 categories of yogurt, long-life dairy, and juice. Egypt has done remarkably well. That is where the growth is coming from. Bakery across the board is doing well, 13% growth in general. Gulf countries are growing stronger in bakery, which is fantastic. KSA itself is close to double-digit growth rate as well. With that said, that is a very high-level view of my products. Let me now move to channels. If you look at this graph, as you can see, traditional trade is more than 50% of our revenue.

Ikram Ulhaque: So that growth, the added capacity, is in full scope and is doing very well in distributing to the market. Fruit juice, again, remarkable is on 19%. I will take a turn this time, fruit juice and long-life dairy. Virtually half the growth in both categories is coming from Egypt. Egypt is doing very well in that respect in all 3 categories of yogurt, long-life dairy, and juice. Egypt has done remarkably well. That is where the growth is coming from. Bakery across the board is doing well, 13% growth in general. Gulf countries are growing stronger in bakery, which is fantastic. KSA itself is close to double-digit growth rate as well. With that said, that is a very high-level view of my products. Let me now move to channels. If you look at this graph, as you can see, traditional trade is more than 50% of our revenue.

Speaker #6: Fruit juice, again, is remarkable at 19%. I will take a chance this time on fruit juice and long-life dairy. Virtually half the growth in both categories is coming from Egypt.

Speaker #6: And Egypt is doing very well in that respect in all three categories: yogurt, long-life dairy, and juice. Egypt has done remarkably well.

Speaker #6: And that's where the growth is coming from. Bakery across the board is doing well; 13% growth in general. Gulf countries are going stronger in bakery.

Speaker #6: Which is fantastic. KSA itself is close to a double-digit growth rate as well. With that said, that's a very high-level view of our products. Let me now move to channel.

Speaker #6: If you look at this graph, as you can see, traditional trade accounts for more than 50% of our revenue. And you can see even the bigger channels are showing double-digit growth rates.

Ikram Ul Haq: And you can see even the bigger channels are going double-digit growth rate, 10% in traditional trade, modern trade 14%, food service 16%. Please note modern trade includes e-commerce, so within modern trade there is mixed performance. But good thing to note is all three channels are working on full cylinder. Our export markets are doing fine as well, growing at 6%. And in total, Almarai growth of 11%, as you can see, is positive across all countries, products, and channels. With that said, let me now request Abdulhadi to take us to the next section for financial performance. Over to you, Abdulhadi.

Ikram Ulhaque: And you can see even the bigger channels are going double-digit growth rate, 10% in traditional trade, modern trade 14%, food service 16%. Please note modern trade includes e-commerce, so within modern trade there is mixed performance. But good thing to note is all three channels are working on full cylinder. Our export markets are doing fine as well, growing at 6%. And in total, Almarai growth of 11%, as you can see, is positive across all countries, products, and channels. With that said, let me now request Abdulhadi to take us to the next section for financial performance. Over to you, Abdulhadi.

Speaker #6: 10% in traditional trade, 14% in modern trade, and 16% in food service. Please note, modern trade includes e-commerce. Within modern trade, there is mixed performance. But the good thing to note is that all three channels are working on full cylinder.

Speaker #6: Our export markets are doing fine as well, growing at 6%. And in total, Almarai growth of 11%, as you can see, is positive across all countries.

Speaker #6: Products and channels. With that said, let me now request Abdul Hadi to take us to the next section for financial performance. Over to you, Abdul Hadi.

Speaker #5: Thank you, Akram. Let me now move from the commercial momentum we have just discussed to the financial performance for the quarter. The key message is that the business continued to deliver strong top-line growth, while the current cost environment has constrained the conversion of that growth into earnings.

Abdulhadi Alamri: Thank you, Ikram. Let me now move from the commercial momentum we have just discussed to the financial performance for the quarter. The key message is that the business continues to deliver strong top-line growth, while the current cost environment has constrained the conversion of that growth into earnings. This bridge tells the earnings story for the quarter very clearly. We begin with net income of SAR 613 million in Q3 of last year. Pricing contributed SAR 191 million, whereas volume, mix, and other factors added SAR 31 million. These gains demonstrate the underlying strength of the commercial performance, but they were substantially absorbed by higher COGS and OpEx. COGS was SAR 132 million of headwind and OpEx reduced earnings by SAR 68 million, and funding and other items by another SAR 17 million. The result was net income of SAR 618 million, up SAR 5 million or 1%.

Speaker #5: This bridge tells the earnings story for the quarter very clearly. We begin with net income of $613 million in Q3 of last year. Pricing contributed $191 million, while volume mix and other factors added $31 million.

Speaker #5: These gains demonstrate the underlying strength of the commercial performance, but they were substantially absorbed by higher cost of goods sold and operating expenses. COGS was a $132 million headwind, and OPEX reduced earnings by $68 million.

Speaker #5: And funding and other items by another $17 million. The result was net income of $618 million, up $5 million, or 1%. The important message here is that the commercial engine is delivering strongly, but the benefits are currently being absorbed by the elevated cost environment.

Abdulhadi Alamri: The important message here is that the commercial engine is delivering strongly, but the benefits are currently being absorbed by the elevated cost environment. Taking a step back from the bridge, the quarter demonstrates the resilience of the underlying business. Revenue increased 11% to SAR 6.18 billion, supported by strong performance across all markets, led by Saudi Arabia, Egypt, and Kuwait, and volume growth in fresh dairy and protein. Operating profit increased 3% to SAR 779 million, despite pressure from energy, logistics, and protein ramp-up costs. Net income hit SAR 618 million, broadly in line with prior year and up SAR 5 million. Taking a step back, looking beneath the group results, the segment performance shows three different but complementary dynamics. Dairy and Juice continued to provide a resilient foundation for the group. Revenue increased 10%, supported by healthy demand and strong market position.

Speaker #5: Taking a step back from the bridge, the quarter demonstrates the resilience of the underlying business. Revenue increased 11% to $6.18 billion, supported by strong performance across all markets, led by Saudi Arabia, Egypt, and Kuwait.

Speaker #5: And volume growth in fresh dairy and protein. Operating profit increased 3% to $779 million, despite pressure from energy, logistics, and protein ramp-up costs. Net income reached $618 million.

Speaker #5: Broadly in line with the prior year and up $5 million. Taking a step back, looking beneath the group results, the segment performance shows three different but complementary dynamics.

Speaker #5: Dairy continued to provide a resilient foundation for the group. Revenue increased 10%, supported by healthy demand and strong market position. Profitability remained comparatively stable, with an improved dairy revenue mix helping to mitigate higher feed and shipping costs.

Abdulhadi Alamri: Profitability remained comparatively stable, with an improved dairy revenue mix helping to mitigate higher feed shipping costs. Bakery delivered another strong quarter, with revenue up 13% and net profits also showing strong growth. The performance reflects excellent commercial execution, improved product mix, and continued operating discipline. Protein remains an important growth engine. Revenue increased by 12% as additional capacity continues to come online. However, profitability remains under pressure from poultry market conditions, higher distribution costs, and costs related to ramp-up of new capacity. Protein expansion is clearly delivering the expected top-line growth. The next phase is about improving utilization and converting that additional scale into stronger profitability. And now I will hand it back over to Ikram.

Speaker #5: Bakery delivered another strong quarter, with revenue up 13% and net profit also showing strong growth. The performance reflects excellent commercial execution, improved product mix, and continued operating discipline.

Speaker #5: Protein remains an important growth engine. Revenue increased by 12% as additional capacity continues to come online. However, profitability remained under pressure from poultry market conditions.

Speaker #5: Higher distribution costs and costs related to the ramp-up of new capacity. Protein expansion is clearly delivering the expected top-line growth. The next phase is about improving utilization and converting that additional scale into stronger profitability.

Speaker #5: And now, I'll hand this back over to Akram.

Speaker #6: Shukran, Abdul Hadi. Let us now go through the first three quarters of the year—the first nine months. The shape of the results is very similar, so we'll go through it fairly fast to allow more time for Q&A.

Ikram Ul Haq: Let us now go through the first 3 quarters of the year, the first 9 months. The shape of the results are very similar, so we will go through it fairly fast to allow more time for Q&A. When you look at the first line of revenue, operating profit, and net income, same trend you would observe in the Q3 as well. Double-digit growth rate on revenue growth is very positive on all fronts, countries, channel, by product as well. Operating profit remains positive despite having very high transportation costs, energy costs, and ramp-up costs. They are the 3 things affecting operating profit. The net income is virtually flat year-on-year. Working capital is ramping up, as you can see at the bottom left-hand side. We are investing more in inventory to manage us through this critical path of the Iran conflict.

Ikram Ulhaque: Let us now go through the first 3 quarters of the year, the first 9 months. The shape of the results are very similar, so we will go through it fairly fast to allow more time for Q&A. When you look at the first line of revenue, operating profit, and net income, same trend you would observe in the Q3 as well. Double-digit growth rate on revenue growth is very positive on all fronts, countries, channel, by product as well. Operating profit remains positive despite having very high transportation costs, energy costs, and ramp-up costs. They are the 3 things affecting operating profit. The net income is virtually flat year-on-year. Working capital is ramping up, as you can see at the bottom left-hand side. We are investing more in inventory to manage us through this critical path of the Iran conflict.

Speaker #6: When you look at the first line of revenue, operating profit, and net income, the same trend can be observed in Q3 as well. Double-digit growth rate on revenue growth is very positive on all fronts.

Speaker #6: Countries, channels, and by product as well. Operating profit remains positive despite having very high transportation costs, energy costs, and ramp-up costs. These are the three things affecting operating profit.

Speaker #6: And the net income is virtually flat year-on-year. Working capital is ramping up, as you can see at the bottom left-hand side. We're investing more in inventory to manage us through this critical path of the Iran conflict.

Speaker #6: Capex is coming down as we have promised earlier, and we'll talk more on the full-year basis as well. We're targeting less than $4 billion — inshallah, we'll get there as well.

Ikram Ul Haq: CapEx is coming down as we have promised earlier, and we will talk more on the full year basis as well. We are targeting less than SAR 4 billion. Inshallah, we will get there as well. Free cash flow becomes very positive as we do not have the inorganic investment from last year. If I go to the next slide, I will not take much time here. The same story continues, the net growth is very positive across the board. As you can see, KSA and Egypt delivering more than SAR 100 million in 3 digits across all categories. Qatar is doing well in percentage term, but that is only because some categories in bakery and poultry have opened up. But it remains under-delivered, but we are doing well on a percentage basis. We do the same thing if you go to the next slide by category. You will see protein taking the lead.

Ikram Ulhaque: CapEx is coming down as we have promised earlier, and we will talk more on the full-year basis as well. We are targeting less than SAR 4 billion. Inshallah, we will get there as well. Free cash flow becomes very positive as we do not have the inorganic investment from last year. If I go to the next slide, I will not take much time here. The same story continues, the net growth is very positive across the board. As you can see, KSA and Egypt delivering more than SAR 100 million in 3 digits across all categories. Qatar is doing well in percentage term, but that is only because some categories in bakery and poultry have opened up. But it remains under-delivered, but we are doing well on a percentage basis. We do the same thing if you go to the next slide by category. You will see protein taking the lead.

Speaker #6: And free cash flow becomes very positive, as we don't have the inorganic investment from last year. If I go to the next slide—I won't take much time here.

Speaker #6: The same story continues—that growth is very positive across the board. As you can see, KSA and Egypt are delivering more than $100 million in three digits across all categories.

Speaker #6: Qatar is doing well in percentage terms, but that's only because some categories in bakery and poultry have opened up. However, it remains under-delivered. But we're doing well on a percentage basis.

Speaker #6: We do the same thing if you go to the next slide by category. You will see protein taking the lead. The growth in protein has now overtaken the growth in fresh dairy, which was the anchor for Almarai.

Ikram Ul Haq: The growth in protein has now overtaken the growth in fresh dairy, which was the anchor for Almarai. So very good to see that we have now multiple sources of growth coming across, and you can see the diversity of Almarai portfolio, delivering growth across the board in multiple fronts. Water business looks positive, but I would like to highlight that this includes an inorganic growth rate. On a YTD basis, we are comparing 9 months versus 2 months. So this growth rate is inflated, but we will adjust it because it is the last quarter. After this quarter, growth will be like-on-like basis. If you go on to the next channel, by channel growth rate, again, positive story across the board, even for the first 9 months as well.

Ikram Ulhaque: The growth in protein has now overtaken the growth in fresh dairy, which was the anchor for Almarai. So very good to see that we have now multiple sources of growth coming across, and you can see the diversity of Almarai portfolio, delivering growth across the board in multiple fronts. Water business looks positive, but I would like to highlight that this includes an inorganic growth rate. On a YTD basis, we are comparing 9 months versus 2 months. So this growth rate is inflated, but we will adjust it because it is the last quarter. After this quarter, growth will be like-on-like basis. If you go on to the next channel, by channel growth rate, again, positive story across the board, even for the first 9 months as well.

Speaker #6: It's very good to see that we now have multiple sources of growth coming across, and you can see that the diversity of the Almarai portfolio is delivering growth across the board on multiple fronts.

Speaker #6: The water business looks positive, but I would like to highlight that this includes an inorganic growth rate. On a wider basis, we are comparing nine months versus two months.

Speaker #6: So, this growth rate is inflated, but we'll adjust it because this is the last quarter. After this quarter, growth will be on a like-for-like basis. If you go on to the next channel, by channel growth rate again, it's a positive story across the board, even for the first nine months as well.

Speaker #6: And despite the Iran conflict, what we were witnessing, especially for food service in the Gulf, is that the sector and the food service tourism sector have remained strong, especially in the food categories.

Ikram Ul Haq: Despite the Iran conflict, what we were witnessing, especially for food service in the Gulf, the sector and the food service tourism sector have remained strong, especially in the food categories. So good to see positive results on that front too. With that said, I will pass on to Abdulhadi Alamri to take us through the financials for the first 9 months as well.

Ikram Ulhaque: Despite the Iran conflict, what we were witnessing, especially for food service in the Gulf, the sector and the food service tourism sector have remained strong, especially in the food categories. So good to see positive results on that front too. With that said, I will pass on to Abdulhadi Alamri to take us through the financials for the first 9 months as well.

Speaker #6: It's good to see positive results on that front, too. With that said, I'll pass on to Abdul Hadi to take us through the financials for the first nine months as well.

Speaker #5: Thank you, Akram. The year to this picture reinforces much of what we saw in Q3. Strong underlying commercial conditions, supported by capacity expansion and broad market execution.

Abdulhadi Alamri: Thank you, Ikram. The year-to-date picture reinforces much of what we saw in Q3. Strong underlying commercial conditions supported by capacity expansion and broad market execution, along with the cost environment that has moderated the translation of growth in revenue to bottom line growth. The year-to-date bridge illustrates this dynamic very clearly. We started with net income of SAR 1.9 billion. Net pricing generated SAR 287 million of benefits, while volume mix and other factors contributed another SAR 182 million. Together, those commercial factors represent a substantial positive contribution. However, they were offset by SAR 172 million of higher costs, SAR 231 million of additional OpEx, SAR 28 million from funding and other items, together with SAR 44 million from the non-occurrence of the prior year Romania impairment reversal. This brings year-to-date net income to SAR 1.986 billion, essentially in line with last year. The message here is that year-to-date is consistent with the quarter.

Speaker #5: Along with the cost environment that moderated the translation of growth in revenue to bottom-line growth, the year-to-this bridge illustrates this dynamic very clearly.

Speaker #5: We started with net income of $1.9 billion. Net pricing generated $287 million of benefits, while volume mix and other factors contributed another $182 million.

Speaker #5: Together, those commercial factors represent a substantial positive contribution. However, there were offsets of $172 million from higher costs, $231 million of additional opex, $28 million from funding and other items, together with $44 million from the non-recurrence of the prior-year Romania impairment reversal.

Speaker #5: This brings year-to-date net income to $1.986 billion, essentially in line with last year. The message here is that year-to-date is consistent with the quarter.

Speaker #5: Demand and review growth are strong. The opportunity ahead is to improve conversion. Looking at the nine-month financial performance as a whole, the strength of the top-line performance remains evident.

Abdulhadi Alamri: Demand and revenue growth are strong. The opportunity ahead is to improve conversion. Looking at the nine-month financial performance as a whole, the strength of the top line performance remains evident. Revenue increased 10% to SAR 18.21 billion, supported by broad-based performance across all markets, along with continued capacity expansion and the integration of the water business. Operating profit increased 1% to SAR 2.46 billion, while net income remains broadly stable at SAR 1.986 billion. Finally, looking at the first nine months by segment, the picture is broadly consistent with what we have seen in the third quarter. Dairy and Juice delivered resilient revenue growth across all markets, with strong performance from Egypt. The segment continued to benefit from favorable dairy mix, although higher feed shipping costs remained a headwind. Bakery remained a strong performer. Revenue increased 8%, while net profits grew 18%, supported by execution, mix optimization, and continued operational excellence.

Speaker #5: Revenue increased 10% to $18.21 billion, supported by broad-based performance across all markets, along with continued capacity expansion and the integration of the water business.

Speaker #5: Operating profit increased 1% to $2.46 billion, while net income remains broadly stable at $1.986 billion. Finally, looking at the first nine months by segment, the picture is broadly consistent.

Speaker #5: With what we have seen in the third quarter, they induced delivered resilience revenue growth across all markets, with strong performance from Egypt. The segment continued to benefit from favorable dairy mix.

Speaker #5: Although higher feed shipping costs remained a headwind, bakery remained a strong performer. Revenue increased 8%, while net profits grew 18%, supported by execution, mix optimization, and continued operational excellence.

Speaker #5: Protein delivered 12% revenue growth, as our expansion strategy continued to translate into additional sales. Profitability, however, remained below the prior rate, reflecting competitive, quality market conditions and higher distribution and energy costs.

Abdulhadi Alamri: Protein delivered 12% revenue growth as our expansion strategy continued to translate into additional sales. Profitability, however, remained below the prior year, reflecting competitive poultry market conditions and higher distribution and energy elevated costs. Our core businesses remain resilient, and the growth investments are generating additional revenues. The priority now is to improve the returns generated from that top line growth. Now I will hand it back to Ikram.

Speaker #5: Our core businesses remain resilient, and the growth investments are generating additional revenues. The priority now is to improve the returns generated from that top-line growth.

Speaker #5: And now, I'll hand it back to Akram.

Speaker #6: Thank you, Abdul Hadi. Let us go through the other highlights for the quarter and for the year. Looking at capex, we're very pleased to see the downward trajectory as we discussed before.

Ikram Ul Haq: Thank you, Al Hadi. Let us go through the other highlights for the quarter and for the year. Looking at CapEx, very pleased to see the downward trajectory. As we talked before, we have passed the peak of this investment cycle. As you can see on a trailing 12-month basis, we are today at 17% of our revenue. Just like you saw the graph in the history going backwards, you will see the same thing going forward as well. For the next two or three years, we expect this percentage to keep going down until it reaches single digits. You will see the same trend, we will elaborate in more detail during our Capital Markets Day coming on this Thursday. If you go to the next slide, working capital. It goes through a temporary surge and now we are having working capital at around 22% of revenue.

Ikram Ulhaque: Thank you, Al Hadi. Let us go through the other highlights for the quarter and for the year. Looking at CapEx, very pleased to see the downward trajectory. As we talked before, we have passed the peak of this investment cycle. As you can see on a trailing 12-month basis, we are today at 17% of our revenue. Just like you saw the graph in the history going backwards, you will see the same thing going forward as well. For the next two or three years, we expect this percentage to keep going down until it reaches single digits. You will see the same trend, we will elaborate in more detail during our Capital Markets Day coming on this Thursday. If you go to the next slide, working capital. It goes through a temporary surge and now we are having working capital at around 22% of revenue.

Speaker #6: We have passed the peak of this investment cycle. As you can see on our trailing 12-month basis, we are today at 17% of our revenue.

Speaker #6: Just like you saw the graph in the history going backwards, you will see the same thing going forward as well. For the next two or three years, we expect this percentage to keep going down until it reaches single digits.

Speaker #6: And you will see the same trend—we will elaborate in more detail during our Capital Market Day coming up this Thursday. If you go to the next slide, working capital goes through a temporary surge, and now we're having working capital at around 22% of revenue.

Speaker #6: As we talked before, this is done by choice. We are comfortable with it, and as the conflict unwinds, we'll be able to better manage it.

Ikram Ul Haq: As we talked before, this is done by choice. We are comfortable with it. As the conflict unwinds, we will be able to better manage it. If you go to the next slide, which is operating cash flow, underlying operating cash flow remains very strong, and I will talk about it on the next slides. It is the adjustment in working capital that makes it around 21%, and this will again turn back upwards when we manage the working capital after the conflict. Interesting slide on slide 29, how Almarai has managed its cash over the last 12 months. The key part here is the first green bar on the chart, SAR 5.9 billion. The underlying business continues to generate cash at a very healthy rate. We are already looking at nearly SAR 6 billion of underlying operating cash flow.

Ikram Ulhaque: As we talked before, this is done by choice. We are comfortable with it. As the conflict unwinds, we will be able to better manage it. If you go to the next slide, which is operating cash flow, underlying operating cash flow remains very strong, and I will talk about it on the next slides. It is the adjustment in working capital that makes it around 21%, and this will again turn back upwards when we manage the working capital after the conflict. Interesting slide on slide 29, how Almarai has managed its cash over the last 12 months. The key part here is the first green bar on the chart, SAR 5.9 billion. The underlying business continues to generate cash at a very healthy rate. We are already looking at nearly SAR 6 billion of underlying operating cash flow.

Speaker #6: If you go to the next slide, which is operating cash flow, underlying operating cash flow remains very strong. I'll talk about it on the next slide.

Speaker #6: It's the adjustment in working capital that makes up around 21%. And this will again turn back upwards when we manage the working capital after the conflict.

Speaker #6: Interesting slide on slide 29: how Almarai has managed its cash over the last 12 months. The key part here is the first green bar on the chart.

Speaker #6: $5.9 billion. The underlying business continues to generate cash at a very healthy rate. We are already looking at nearly $6 billion of underlying operating cash flow.

Speaker #6: This is getting, in the short term, affected by the working capital adjustment, which has been driven by inventory. And that's why the last 12-month OCF is $5.1 billion.

Ikram Ul Haq: This is getting, in the short term, affected by the working capital adjustment, which has been driven by inventory, and that is why the last 12 month OCF was SAR 5.1 billion. When you look at the CapEx, you can see already it is hitting SAR 4 billion on a 12-month basis. Biological assets take up SAR 0.5 billion in a total of SAR 4.5 billion. Free cash flow is now looking at positive as we speak today for this quarter on a TTM basis. We expect that momentum to grow further in the next 3 or 4 quarters as well. You can see the borrowing funds from the bank to pay for our funding costs to the banks and dividend to our shareholders. If I keep going to the next slides, net debt trends, we are seeing the peak of the net debt, the leverage ratio as we speak today.

Ikram Ulhaque: This is getting, in the short term, affected by the working capital adjustment, which has been driven by inventory, and that is why the last 12 month OCF was SAR 5.1 billion. When you look at the CapEx, you can see already it is hitting SAR 4 billion on a 12-month basis. Biological assets take up SAR 0.5 billion in a total of SAR 4.5 billion. Free cash flow is now looking at positive as we speak today for this quarter on a TTM basis. We expect that momentum to grow further in the next 3 or 4 quarters as well. You can see the borrowing funds from the bank to pay for our funding costs to the banks and dividend to our shareholders. If I keep going to the next slides, net debt trends, we are seeing the peak of the net debt, the leverage ratio as we speak today.

Speaker #6: When you look at the CapEx, you can see already it's hitting $4 billion on a 12-month basis. Biological assets take up half a billion, and in total, $4.5 billion.

Speaker #6: Free cash flow is now looking positive, as we speak today, for this quarter on a TTM basis. We expect that momentum to grow further in the next three or four quarters as well.

Speaker #6: And then you can see the borrowing funds from the bank to pay for our funding costs to the banks, and dividends to our shareholders.

Speaker #6: If I keep going to the next slide, net debt trend. We're seeing the peak of the net debt, the leverage ratio, as we speak today.

Speaker #6: As of September 2026, net debt to EBITDA is 2.72. In the next few quarters and years, you will see our EBITDA and our operating cash flow grow gradually by $300 to $400 million every single year.

Ikram Ul Haq: As of September 2026, net debt to EBITDA is 2.72. In the next few quarters and years, you will see our EBITDA, our operating cash flow, grow gradually by SAR 300-400 million every single year. You will see our debt remaining constant or going down as well. As a result, you will see this net debt trend coming down, just like you have seen the CapEx coming down over the last 2 or 3 quarters. If you look at EBITDA and EBIT margins, they are affected in the short term. This is as a result of the war. As you can see, we are growing top line very successfully, but the bottom line is affected temporarily because of what we are seeing in transportation costs and the feed costs.

Ikram Ulhaque: As of September 2026, net debt to EBITDA is 2.72. In the next few quarters and years, you will see our EBITDA, our operating cash flow, grow gradually by SAR 300-400 million every single year. You will see our debt remaining constant or going down as well. As a result, you will see this net debt trend coming down, just like you have seen the CapEx coming down over the last 2 or 3 quarters. If you look at EBITDA and EBIT margins, they are affected in the short term. This is as a result of the war. As you can see, we are growing top line very successfully, but the bottom line is affected temporarily because of what we are seeing in transportation costs and the feed costs.

Speaker #6: You will see our debt remaining constant or going down as well. And as a result, you will see this net debt trend coming down, just like you have seen the capex coming down over the last two or three quarters.

Speaker #6: If you look at EBITDA and even margins, they are affected in the short term. This is as a result of the war. As you can see, we are growing the top line very successfully.

Speaker #6: But the short, the bottom line is affected temporarily because of what we're seeing in transportation costs and feed costs. We are confident during the next one or two years, when the conflict unwinds, we'll be able to return profitability back to the 14% to 15% range, as we target in the long term.

Ikram Ul Haq: We are confident during the next 1 or 2 years, when the conflict unwinds, we will be able to return the profitability back to the 14% to 15% range as we target in the long term. If we go to the next slide on debt maturity, we have already arranged all the funding available for the next 1 year. We are in talk with the banks and things are already signed up. So very comfortable, regardless of what happens in the capital markets, our funding is sorted for the next 12 months. Inshallah, by the time we finish the year-end, we are targeting for the next 24 months as well. So we can see the challenges ahead with comfort in mind that we have no issues on liquidity too. Next slide is our cash dividends. Highlights that Almarai will pay its shareholder regardless of the trading conditions.

Ikram Ulhaque: We are confident during the next 1 or 2 years, when the conflict unwinds, we will be able to return the profitability back to the 14% to 15% range as we target in the long term. If we go to the next slide on debt maturity, we have already arranged all the funding available for the next 1 year. We are in talk with the banks and things are already signed up. So very comfortable, regardless of what happens in the capital markets, our funding is sorted for the next 12 months. Inshallah, by the time we finish the year-end, we are targeting for the next 24 months as well. So we can see the challenges ahead with comfort in mind that we have no issues on liquidity too. Next slide is our cash dividends. Highlights that Almarai will pay its shareholder regardless of the trading conditions.

Speaker #6: If we go to the next slide on debt maturity, we have already arranged all the funding available for the next one year. We are in talks with the banks and things are already signed up.

Speaker #6: So, we are very comfortable regardless of what happens in the capital markets. Our funding is sorted for the next 12 months, and inshallah, by the time we finish the year-end, we're targeting the next 24 months as well.

Speaker #6: So we can see the challenges ahead, with comfort in mind that we have no issues on liquidity, too. Next slide is what cash dividend highlights that Almarai will pay its shareholders regardless of the trading conditions.

Speaker #6: And you can see, in the very strong history of Almarai, through all the investment cycles, we make sure the dividends keep on rising in line.

Ikram Ul Haq: You can see the very strong history of Almarai through all the investment cycles, making sure the dividends keep on rising in line. With that, I would like to request our CEO, Fawaz Aljasser, to take us to the final slides of the deck and the key takeaways for the quarter. Fawaz Aljasser, over to you.

Ikram Ulhaque: You can see the very strong history of Almarai through all the investment cycles, making sure the dividends keep on rising in line. With that, I would like to request our CEO, Fawaz Aljasser, to take us to the final slides of the deck and the key takeaways for the quarter. Fawaz Aljasser, over to you.

Speaker #6: With that, I would like to request our CEO, Mr. Faisal Jasser, to take us to the final slides of the deck and the key takeaways for the quarter.

Speaker #6: Mr. Faisal Jasser, over to you.

Speaker #4: Thank you, Akram. Assalamualaikum warahmatullahi wabarakatuh. Despite everything happening in the region, demand remains strong. Almarai continues to grow. We deliver double-digit growth across all segments, geographies, and channels.

Fawaz Aljasser: Thank you. Despite everything happening in the region, demand remains strong. Almarai continues to grow. We delivered double-digit growth across all the segments, geography, and channels. But we still have a challenge, the challenge of the feed imports and the poultry markets. We are building our inventory to make sure that our products remain available on the shelves, supply is not affected, and this shows how resilient we are. But that comes with the costs. Profitability remains under pressure, hopefully in the short term, but mainly due to the current situation.

Speaker #4: But we still have a challenge—the challenge of the feed imports and the three markets. We are building our inventory to make sure that our product remains available on the shelf, supply is not affected, and this shows how resilient we are.

Speaker #4: But that comes with a cost. Profitability remains under pressure—hopefully in the short term, but mainly due to the current situation.

Speaker #6: Thank you very much, Mr. Faisal. With that said, let us go to the last slide, and we'll open the floor for Q&A. If you can ask Al Jazeera Capital to open the session, we're happy to take questions on that.

Ikram Ul Haq: Thank you very much, Fahd. With that said, let us go to the last slide and we will open the floor for Q&A. If we can ask Aljazira Capital to open the session, and we are happy to take questions from there. Al Dhahi.

Ikram Ulhaque: Thank you very much, Fahd. With that said, let us go to the last slide and we will open the floor for Q&A. If we can ask AlJazira Capital to open the session, and we are happy to take questions from there. Al Dhahi.

Speaker #4: Yes, thank you, Sir Fawad, and Mr. Khan. And Fahad Rahman, if you can please take us through the Q&A.

Abdulhadi Alamri: Yes. Thank you, sir, for welcoming, Ikram Ul Haq, and Fahd, if you can please take us through the Q&A.

Abdulhadi Alamri: Yes. Thank you, sir, for welcoming, Ikram Ulhaque, and Fahd, if you can please take us through the Q&A.

Speaker #5: Thank you, panelists, ladies and gentlemen. We will now commence with the Q&A session. You may raise your hand to speak with our panelists by pressing the hand icon on your screen.

Fahad Irfan: Thank you, panelists. Ladies and gentlemen, we will now commence with the Q&A session. You may raise your hand to speak with our panelists by pressing the hand icon on your screen, or alternatively, pop your question onto the Q&A chat box. With that being said, we will, however, prioritize raised hands. Please limit your questions to two at a time so we may cater to all participants. You are more than welcome, however, to join the back of the queue if you have a follow-up. You may introduce yourselves. Our first question today comes from the line of Raghad Al Najem. Raghad, you are unmuted. Please unmute yourself locally and go ahead with your question.

Speaker #5: Alternatively, you may drop your question into the Q&A chat box. That being said, we will prioritize raised hands. Please limit your questions to two at a time so we can accommodate all participants.

Speaker #5: We are more than welcome, however, to join the back of the queue if you have a follow-up. You may introduce yourself. Our first question today comes from the line of Raghad Al Najim.

Speaker #5: Raghad, you're unmuted. Please unmute yourself locally and go ahead with your question.

Speaker #7: Hi everyone. Congratulations, management, and thank you for a great presentation. I have two questions from my end. The first one is regarding the bakery segment.

Raghad Al Najem: Hi, everyone. Congratulations, management, and thank you for a great presentation. I have two questions from my end. The first one is regarding the bakery segment. The performance was quite strong this quarter, and it is the same margin despite the higher production costs. So what is the driver behind this growth?

Raghad Alnajim: Hi, everyone. Congratulations, management, and thank you for a great presentation. I have two questions from my end. The first one is regarding the bakery segment. The performance was quite strong this quarter, and it is the same margin despite the higher production costs. So what is the driver behind this growth?

Speaker #7: The performance was quite strong this quarter, and it's the same margin despite the higher production costs. So, what is the driver behind this growth?

Speaker #6: It's a volume net growth, and we have done pricing adjustments recently in Q2 and Q3 as well. That's the benefit coming through. And as I said in the presentation, we're seeing growth in the Gulf markets, much stronger than KSA as well.

Ikram Ul Haq: It is a volume-led growth, and we have done pricing adjustments recently in Q2 and Q3 as well, and that is the benefit coming through. As I said in the presentation as well, we are seeing growth in the Gulf markets much stronger than KSA as well. It is a mix issue. We are doing very well on breads. We have no issues on that one. But in terms of treats, which is the cakes category, this is where we are having a mix issue. Some sectors are growing very strongly, very comfortable on bread and buns. But in terms of some of the cakes and other product categories, we are facing some pressure. The other thing, wastage has been doing very well in this sector. We are running much lower than our yearly averages, less than 3% to 2%, and it is giving us another greater benefit to our P&L.

Ikram Ulhaque: It is a volume-led growth, and we have done pricing adjustments recently in Q2 and Q3 as well, and that is the benefit coming through. As I said in the presentation as well, we are seeing growth in the Gulf markets much stronger than KSA as well. It is a mix issue. We are doing very well on breads. We have no issues on that one. But in terms of treats, which is the cakes category, this is where we are having a mix issue. Some sectors are growing very strongly, very comfortable on bread and buns. But in terms of some of the cakes and other product categories, we are facing some pressure. The other thing, wastage has been doing very well in this sector. We are running much lower than our yearly averages, less than 3% to 2%, and it is giving us another greater benefit to our P&L.

Speaker #6: It's a mixed issue. We're doing very well on breads; we have no issues with that one. But in terms of treats—which is the cakes category—this is where we are having a mixed issue.

Speaker #6: So, some sectors are performing very strongly. We are very comfortable with bread and buns. However, in terms of some of the cakes and other product categories, we are facing some pressure.

Speaker #6: Another thing: wastage has been doing very well in this sector. We are running much lower than our yearly averages—less than 2 to 3 percent.

Speaker #6: And it's giving us another greater benefit to our P&L.

Speaker #7: Okay, great. For the second question, it's on the other activities. We saw larger losses—around $40 million, which is more than the same quarter last year.

Raghad Al Najem: Okay, great. For the second question, it is on the other activities. We saw larger losses by around SAR 14 million. It is more than the same quarter last year. Can you give us more color of what is happening in this segment?

Raghad Alnajim: Okay, great. For the second question, it is on the other activities. We saw larger losses by around SAR 14 million. It is more than the same quarter last year. Can you give us more color of what is happening in this segment?

Speaker #7: Can you give us more color of what's happening in this segment?

Speaker #6: Yeah, the other sectors look like they include water, and again, this is the inorganic acquisition, which is getting clubbed into that sector. I would recommend that from next quarter onwards, you will have a proper year-on-year comparison.

Ikram Ul Haq: Yeah. The other sectors, look, it includes water. Again, this is the inorganic acquisition which is getting clubbed into that sector. I would recommend that from next quarter onwards, you will have a proper like-on-like comparison. On top of it, what we are facing in other segment is fundamental results. So fundamental results are more trading in nature. Given what is happening in the region and given what is happening with alfalfa, Almarai is trying to sell a lot of products within USA and Argentina as well. That is resulting in some short-term losses because we are selling crop in the same countries as well, and that is the reason for this temporary blip in the other sector.

Ikram Ulhaque: Yeah. The other sectors, look, it includes water. Again, this is the inorganic acquisition which is getting clubbed into that sector. I would recommend that from next quarter onwards, you will have a proper like-on-like comparison. On top of it, what we are facing in other segment is fundamental results. So fundamental results are more trading in nature. Given what is happening in the region and given what is happening with alfalfa, Almarai is trying to sell a lot of products within USA and Argentina as well. That is resulting in some short-term losses because we are selling crop in the same countries as well, and that is the reason for this temporary blip in the other sector.

Speaker #6: And on top of it, what we are facing in the other segment is fundamental results. So, fundamental results are more trading in nature. Given what's happening in the region, and given what's happening with alfalfa, Almarai is trying to sell a lot of products within the USA and Argentina as well.

Speaker #6: And that's resulting in some short-term losses because we're selling crop in the same countries as well. That's the reason for this temporary blip in the other sector.

Speaker #7: Okay, great. Thank you, management.

Raghad Al Najem: Okay, great. Thank you, management.

Raghad Alnajim: Okay, great. Thank you, management.

Ikram Ul Haq: Yeah.

Ikram Ulhaque: Yeah.

Speaker #5: Thank you. Our next question comes from the line of Mr. Abdullah Al-Bureidi. Mr. Abdullah Al-Bureidi, you're unmuted. Please unmute yourself locally and go ahead with your question.

Fahad Irfan: Thank you. Our next question comes from the line of Mr. Abdullah Al Buraimi. Mr. Abdullah Al Buraimi, you are unmuted. Please unmute yourself locally and go ahead with your question.

Speaker #8: Hello. Thank you very much for the great presentation, and congratulations on the strategy and the results. Just to follow up on the question regarding the other activities, could you quantify the losses that are coming from fundamentally?

Abdullah Al Buraimi: Hello. Thank you very much for the great presentation and congrats on the strategy and the results. Just to follow up on the question regarding the other activities, could you quantify the losses that is coming from Fondomonte? Because even looking at the cash flow statements, there is an inventory or account receivables, I do not know which is which, a loss of around SAR 27 million, which might be a one-off. The other thing is that we are noticing with the selling and distribution expenses, it is growing year-over-year, similar to the last quarter, and it is eating away whatever contribution margin that is being added. If we go to the net income bridge, we notice the increase in net pricing is SAR 190 and the increase in cost of revenue is around SAR 130 so that is SAR 60 million netting on gross profits.

Abdullah Al-Buraidi: Hello. Thank you very much for the great presentation and congrats on the strategy and the results. Just to follow up on the question regarding the other activities, could you quantify the losses that is coming from Fondomonte? Because even looking at the cash flow statements, there is an inventory or account receivables, I do not know which is which, a loss of around SAR 27 million, which might be a one-off. The other thing is that we are noticing with the selling and distribution expenses, it is growing year-over-year, similar to the last quarter, and it is eating away whatever contribution margin that is being added. If we go to the net income bridge, we notice the increase in net pricing is SAR 190 and the increase in cost of revenue is around SAR 130 so that is SAR 60 million netting on gross profits.

Speaker #8: Because even looking at the cash flow statements, there is an inventory or account receivables—I don't know which is which—a loss of around $27 million, which might be a one-off.

Speaker #8: The other thing is that we are noticing with the selling and distribution expenses—they are growing year over year, similar to the last quarter. And it is eating away whatever contribution margin is being added. If we go to the net income bridge, we notice the increase in net pricing is 190, and the increase in cost of revenue is around 130.

Speaker #8: So that's $60 million netting on gross profits, but that is being eaten away by higher S&D expenses. And regarding energy, we know that the big bulk of it is in the cost of revenue.

Abdullah Al Buraimi: But that is eaten away by higher S&D expenses. Regarding energy, we know that the big bulk of it is in the cost of revenue. Could you elaborate on what is happening with the S&D?

Abdullah Al-Buraidi: But that is eaten away by higher S&D expenses. Regarding energy, we know that the big bulk of it is in the cost of revenue. Could you elaborate on what is happening with the S&D?

Speaker #8: So, could you elaborate on what is happening with the S&D?

Speaker #6: Well, Abdullah, you've gone through all the financial statement questions, and it's interesting how you have constructed the questions. I'll try to answer them.

Ikram Ul Haq: Well, hi, Abdullah. You have gone through the whole financial statement questions, and it is interesting how you have constructed the question. I will try to answer them. I think it covers a lot of them, but let me go through one by one. If I forget, remind me of the question again, please. Look, I will start with the other one. We do not give details on the Fondomonte and sub-channels and the reason is, again, you see a lot of temporary difference because of the accounting of the crops, which happens at each country at different level. You miss by 2 or 3 days on the crops already, you will have a very big volatility in the P&L. The reference you made to the inventory issue, the SAR 27 million, in the cash flow statement, you are absolutely right. It is up by SAR 27 million from Q2.

Ikram Ulhaque: Well, hi, Abdullah. You have gone through the whole financial statement questions, and it is interesting how you have constructed the question. I will try to answer them. I think it covers a lot of them, but let me go through one by one. If I forget, remind me of the question again, please. Look, I will start with the other one. We do not give details on the Fondomonte and sub-channels and the reason is, again, you see a lot of temporary difference because of the accounting of the crops, which happens at each country at different level. You miss by 2 or 3 days on the crops already, you will have a very big volatility in the P&L. The reference you made to the inventory issue, the SAR 27 million, in the cash flow statement, you are absolutely right. It is up by SAR 27 million from Q2.

Speaker #6: I think it covers a lot of them, but let me go through one by one. And if I forget, please remind me of the question again.

Speaker #6: Look, I'll start with the other one. We don't give details on the fundamental and sub-channels, and the reason is, again, you see a lot of temporary difference because of the accounting of the crops.

Speaker #6: This happens in each country at different levels. If you miss by two or three days when the crops are ready, you will have very big volatility in the P&L.

Speaker #6: The reference you made to the inventory issue, the 27 million reals, and the cash flow statement—you're absolutely right. It's up by 27 million reals from Q2.

Speaker #6: This is a higher provision we are taking. Actually, the sign is the other way around, if you notice. So Almarai is taking a higher provision in inventory, and that's not because of fundamentals.

Ikram Ul Haq: This is higher provision we are taking. It is actually the sign is the other way around as you noticed. Almarai is taking higher provision in inventory, and that is not because of Fondomonte. That is because we are carrying more inventory within Saudi Arabia. I talked about SAR 1 billion of extra inventory as well. Some of the inventory comes with a higher risk, and we have automatic systems by which we are forced to take higher inventory provision because of expected losses, because of dryness, because of water damage at the bottom of the pallets. Those things as a result of that. There is no change in debtors, as you can see on the top of the P&L, in the main P&L section. This is inventory, and this is coming from the Saudi Arabian inventory health, and that is because of the increased inventory.

Ikram Ulhaque: This is higher provision we are taking. It is actually the sign is the other way around as you noticed. Almarai is taking higher provision in inventory, and that is not because of Fondomonte. That is because we are carrying more inventory within Saudi Arabia. I talked about SAR 1 billion of extra inventory as well. Some of the inventory comes with a higher risk, and we have automatic systems by which we are forced to take higher inventory provision because of expected losses, because of dryness, because of water damage at the bottom of the pallets. Those things as a result of that. There is no change in debtors, as you can see on the top of the P&L, in the main P&L section. This is inventory, and this is coming from the Saudi Arabian inventory health, and that is because of the increased inventory.

Speaker #6: That's because we are carrying more inventory within Saudi Arabia. I talked about SAR 1 billion of extra inventory as well. And some of the inventory comes with higher risk, and we have automatic systems.

Speaker #6: By which we are forced to take higher inventory provision because of expected losses due to dryness, and because of water damage at the bottom of the pallet.

Speaker #6: So, those things are a result of that. There is no change in debtors, as you can see at the top of the P&L in the main P&L section.

Speaker #6: So this is inventory. And this is coming from the Saudi Arabian inventory health, and that's because of the increase in inventory. So that's your first question.

Ikram Ul Haq: That is your first question. Your second question was about S&D cost. To sell 11% growth rates volume, you can imagine how much volume we are pushing through, how much extra trucks and vans we are carrying. On top of it, the extra expense we are carrying for diesel, especially in the UAE, where we have seen at least 2 or 3 price increases during the year. That is also hitting the S&D. I think with all the efficiency, I think Almarai is doing very well to keep S&D cost in line with revenue because we are seeing a lot of pressures on the underlying, let us say, the cost factors as well. You may have some other questions which I might have forgotten, but please remind me.

Ikram Ulhaque: That is your first question. Your second question was about S&D cost. To sell 11% growth rates volume, you can imagine how much volume we are pushing through, how much extra trucks and vans we are carrying. On top of it, the extra expense we are carrying for diesel, especially in the UAE, where we have seen at least 2 or 3 price increases during the year. That is also hitting the S&D. I think with all the efficiency, I think Almarai is doing very well to keep S&D cost in line with revenue because we are seeing a lot of pressures on the underlying, let us say, the cost factors as well. You may have some other questions which I might have forgotten, but please remind me.

Speaker #6: Your second question was about S&D cost. To sell at an 11% growth rate in volume, you can imagine how much volume we are pushing through—how many extra trucks and vans we are carrying.

Speaker #6: On top of it, the extra expense we are carrying for diesel, especially in the UAE, where we have seen at least two or three price increases during the year.

Speaker #6: That's also hitting the S&D. So I think with all the efficiency, Almarai is doing very well to keep S&D costs in line with revenue, because we're seeing a lot of pressures on the underlying, let's say, cost factors as well.

Speaker #6: You may have some other questions which I might have forgotten, but please remind me. Diesel cost—so diesel cost affects both lines. Diesel cost will affect S&D.

Abdullah Al Buraimi: Please, can you please talk about diesel?

Abdullah Al-Buraidi: Please, can you please talk about diesel?

Ikram Ul Haq: Diesel cost.

Ikram Ulhaque: Diesel cost.

Abdullah Al Buraimi: Please.

Abdullah Al-Buraidi: Please.

Ikram Ul Haq: Diesel cost affect both lines. Diesel cost will affect S&D. In some of our factories, we are using diesel as an alternative for electricity. Not all of our factories are connected to the grid. So the impact of the diesel affect both parts. It affects the COGS line, affects the S&D line as well. I would say the reefer from the factory all the way to the depot, it is covered in COGS. But all the vans that you see on the street every single day, the diesel used in those are affected from the S&D cost. This is why when I talk of UAE and other countries, that is where the S&D cost is going up as well.

Ikram Ulhaque: Diesel cost affect both lines. Diesel cost will affect S&D. In some of our factories, we are using diesel as an alternative for electricity. Not all of our factories are connected to the grid. So the impact of the diesel affect both parts. It affects the COGS line, affects the S&D line as well. I would say the reefer from the factory all the way to the depot, it is covered in COGS. But all the vans that you see on the street every single day, the diesel used in those are affected from the S&D cost. This is why when I talk of UAE and other countries, that is where the S&D cost is going up as well.

Speaker #6: In some of our factories, we are using diesel as an alternative to electricity. Not all of our factories are connected to the grid.

Speaker #6: So the impact of the diesel affects both parts. It affects the COGS line and affects the S&D line as well. I would say the reefer from the factory all the way to the depot is covered in COGS.

Speaker #6: But all the vans that you see on the street every single day, the diesel used in those is affected by the S&D cost. And this is why, when I talk about UAE and other countries, that’s why the S&D cost is going up as well.

Speaker #8: Yeah, thank you. That covers it all and it's quite informative. Thank you very much. But just as a confirmation, would you quantify the one-offs regarding the inventory provision and the losses coming from crops to be around $40 million this quarter?

Abdullah Al Buraimi: Yeah. Thank you. That covers it all, and it is quite informative. Thank you very much. But just as a confirmation, would you quantify that the one-offs regarding the inventory provision and the losses that is coming from crops to be around SAR 40 million this quarter or close to this?

Abdullah Al-Buraidi: Yeah. Thank you. That covers it all, and it is quite informative. Thank you very much. But just as a confirmation, would you quantify that the one-offs regarding the inventory provision and the losses that is coming from crops to be around SAR 40 million this quarter or close to this?

Speaker #8: Or close to this?

Ikram Ul Haq: No, I don't think so, no. Look, as I said again, the accounting for crops is different. They are ready for sale. So what happens, I don't want to go into an accounting session, but especially in those countries, we are using crops for both reasons, using crops for sale in the market as well, and using crops to be distributed internally to Almarai as well. So they just follow, you will have huge swings between the quarters, and that is why we always manage it in the sense that we keep it in other categories. It distorts the profitability up and down. So yeah, that is the reason.

Ikram Ulhaque: No, I don't think so, no. Look, as I said again, the accounting for crops is different. They are ready for sale. So what happens, I don't want to go into an accounting session, but especially in those countries, we are using crops for both reasons, using crops for sale in the market as well, and using crops to be distributed internally to Almarai as well. So they just follow, you will have huge swings between the quarters, and that is why we always manage it in the sense that we keep it in other categories. It distorts the profitability up and down. So yeah, that is the reason.

Speaker #6: No, I don't think so. No. Look, as I said again, the accounting for crops is different. They're ready for sale. So what happens—I don't want to go into an accounting session—but especially in those countries, we are using crops for both reasons.

Speaker #6: Using crops for sale in the market as well, and using crops to be distributed internally to Almarai as well. So, as you follow, you will have huge swings between the quarters.

Speaker #6: And that's why we always manage it in the sense that we keep it in other categories. It distorts the profitability up and down. So yeah, that's the reason.

Speaker #5: Thank you, management. Our next question comes from Rashad Kawan. Rashad, please unmute yourself locally and go ahead with your question.

Abdullah Al Buraimi: Thank you.

Abdullah Al-Buraidi: Thank you.

Fahad Irfan: Management, our next question comes from Rashad Dawan. Rashad, please unmute yourself locally and go ahead with your question.

Ikram Ul Haq: Yeah.

Ikram Ulhaque: Yeah.

Speaker #7: Hey guys, good afternoon. Thank you for taking my questions. A couple for me, please. Ikram, I think if I take you back to the Q2 conference call, you had said that if things remain where they are, you expected that the pricing action you took in Fresh Dairy, in particular, would result in net income growth year over year.

Rashad Dawan: Hey, guys. Good afternoon. Thank you for taking my questions. A couple from me, please. Ikram, I think if I take you back to the Q2 conference call, you had said that if things remain where they are, you expected that the pricing action you took in fresh dairy in particular would result in net income growth year-over-year, I think, at the back half of the year. Now, clearly, circumstances have changed. I think the escalation we have seen in the Red Sea, no doubt, added to the cost headwinds you had already been seeing. Some of the feedstock raw materials have also been moving higher over the last couple of months, when I look at corn or soybean as an example. So I think all things considered, it definitely seems a fantastic outcome that earnings are stable year-over-year despite all these headwinds.

Rashad Kawan: Hey, guys. Good afternoon. Thank you for taking my questions. A couple from me, please. Ikram, I think if I take you back to the Q2 conference call, you had said that if things remain where they are, you expected that the pricing action you took in fresh dairy in particular would result in net income growth year-over-year, I think, at the back half of the year. Now, clearly, circumstances have changed. I think the escalation we have seen in the Red Sea, no doubt, added to the cost headwinds you had already been seeing. Some of the feedstock raw materials have also been moving higher over the last couple of months, when I look at corn or soybean as an example. So I think all things considered, it definitely seems a fantastic outcome that earnings are stable year-over-year despite all these headwinds.

Speaker #7: I think at the back half of the year. Now, clearly, circumstances have changed. I think the escalation we've seen in the Red Sea has no doubt added to the cost headwinds you had already been seeing.

Speaker #7: Some of the feedstock raw materials have also been moving higher over the last couple of months. When I look at corn or soybean, as an example,

Speaker #7: So I think, all things considered, it definitely seems like a fantastic outcome that earnings are stable year over year despite all these headwinds. I guess the natural question from here, though, is as you look into Q4 and especially into next year, with diesel prices potentially being another swing factor, how are you thinking about the balance of protecting margins versus passing pricing onto the consumer?

Rashad Dawan: I guess the natural question from here, though, is as you look into Q4, and especially into next year with diesel prices potentially being another swing factor, how are you thinking about the balance of protecting margins versus passing pricing onto the consumer? Would you consider taking, I guess, more aggressive pricing action, given how well the price increases across the board have been taken, domestically in Saudi, and the fact that consumption overall has been quite resilient despite all the uncertainty?

Rashad Kawan: I guess the natural question from here, though, is as you look into Q4, and especially into next year with diesel prices potentially being another swing factor, how are you thinking about the balance of protecting margins versus passing pricing onto the consumer? Would you consider taking, I guess, more aggressive pricing action, given how well the price increases across the board have been taken, domestically in Saudi, and the fact that consumption overall has been quite resilient despite all the uncertainty?

Speaker #7: Would you consider taking, I guess, more aggressive pricing action given how well the price increases across the board have been taken domestically in Saudi, and the fact that consumption overall has been quite resilient despite all the uncertainty?

Speaker #6: That's a very good question. You're reading my mind. So what's that? Look, when you're talking about Q2, I think all of us, including you, me, and the people on the call as well, were optimistic about the conflict finishing soon as well.

Ikram Ul Haq: Rashad, very good question. You are reading my mind. Well said. Look, when we were talking in Q2, I think all of us, including you, me, and the people on the call, we were optimistic about the conflict finishing soon. If you remember, there was a lot of news at that time that the war will finish around June time, and we will all go back to, at least within a few months or quarters, to a normalized situation. The escalation has continued, unfortunately, and as we speak today, that has gotten worsened. I do not have something in mind that how this conflict finish. If we hear to the US side, I would say the end of the year is a reasonable assumption. Somebody has to take a call on that, let us say from a financial point of view.

Ikram Ulhaque: Rashad, very good question. You are reading my mind. Well said. Look, when we were talking in Q2, I think all of us, including you, me, and the people on the call, we were optimistic about the conflict finishing soon. If you remember, there was a lot of news at that time that the war will finish around June time, and we will all go back to, at least within a few months or quarters, to a normalized situation. The escalation has continued, unfortunately, and as we speak today, that has gotten worsened. I do not have something in mind that how this conflict finish. If we hear to the US side, I would say the end of the year is a reasonable assumption. Somebody has to take a call on that, let us say from a financial point of view.

Speaker #6: If you remember, there was a lot of news at that time that the war would finish around June, and we would all go back, at least within a few months or a quarter, to a normalized situation.

Speaker #6: The escalation has continued, unfortunately, and as we speak today, it has gotten worse. So, I don't have something in mind for how this conflict finishes.

Speaker #6: If we head to the US side, I would say the end of the year is a reasonable assumption. Somebody has to take a call on that.

Speaker #6: Let's say, from a financial point of view, end of the year sounds like a reasonable assumption for the conflict to finish, even if it takes two or three quarters extra to get to a normalized position.

Ikram Ul Haq: End of the year sounds a reasonable assumption for the conflict to finish, even if it takes two or three quarters extra to get to a normalized position. But as you rightly said, if the conflict continued further, and it has continued, if it keeps on going, the cost impact on all the dairy companies, and I would say all the food companies in the region, in Saudi Arabia, would be significant. We will face quite significant headwinds, in terms of elevated cost of importation of food. This is something that Almarai will make a decision, and it will employ everything available in its parcel. We will look at all options. Our first option is always about management of cost. We have to look internal first, and we have to make sure we are doing everything we can to reduce the cost. Then, of course, pricing remains an option.

Ikram Ulhaque: End of the year sounds a reasonable assumption for the conflict to finish, even if it takes two or three quarters extra to get to a normalized position. But as you rightly said, if the conflict continued further, and it has continued, if it keeps on going, the cost impact on all the dairy companies, and I would say all the food companies in the region, in Saudi Arabia, would be significant. We will face quite significant headwinds, in terms of elevated cost of importation of food. This is something that Almarai will make a decision, and it will employ everything available in its parcel. We will look at all options. Our first option is always about management of cost. We have to look internal first, and we have to make sure we are doing everything we can to reduce the cost. Then, of course, pricing remains an option.

Speaker #6: But as you rightly said, if the conflict continued further—and it has continued—if it kept on going, the cost impact on all the dairy companies, and I will say all the food companies in the region, in Saudi Arabia, would be significant.

Speaker #6: We will face quite significant headwinds in terms of elevated cost of importation of food. This is something that Almarai will make a decision on, and it will employ everything available in its parcel.

Speaker #6: We will look at all options. Our first option is always about management of cost. We have to look internally first, and we have to make sure we are doing everything we can to reduce the cost.

Speaker #6: And then, of course, pricing remains an option. It's not the first choice by default, but it will remain an option. For example, if the war continues for another two or three quarters, then we will have to make a call, and perhaps pricing would be initiated.

Ikram Ul Haq: It is not the first choice by default, but it will remain an option in, for example, if the war continues for another two or three quarters, then we will have to make a call, and perhaps pricing would be initiated. But as I said, it is not the first choice as we speak today.

Ikram Ulhaque: It is not the first choice by default, but it will remain an option in, for example, if the war continues for another two or three quarters, then we will have to make a call, and perhaps pricing would be initiated. But as I said, it is not the first choice as we speak today.

Speaker #6: But as I said, it’s not our first choice, as we’ve spoken to that.

Speaker #7: Okay, that's clear. And then, second question if I can, about poultry. I think you had said that you were seeing some improvement in the promotional dynamics in Q1 and particularly in Q2, probably helped by the conflict adding cost headwinds to importers, etc.

Rashad Dawan: Okay. That is clear. Second question, if I can, on poultry. I think you had said that you were seeing some improvement in the promotional dynamics, in Q1 and particularly in Q2, probably helped by the conflict adding cost headwinds to importers, et cetera. That seems to have changed based on the commentary on this call and looking at the results in poultry in terms of profitability. Can you talk us through what you are seeing, and expectations through the rest of the year in terms of promotional intensity and pricing there?

Rashad Kawan: Okay. That is clear. Second question, if I can, on poultry. I think you had said that you were seeing some improvement in the promotional dynamics, in Q1 and particularly in Q2, probably helped by the conflict adding cost headwinds to importers, etc. That seems to have changed based on the commentary on this call and looking at the results in poultry in terms of profitability. Can you talk us through what you are seeing, and expectations through the rest of the year in terms of promotional intensity and pricing there?

Speaker #7: That seems to have changed based on the commentary on this call, and looking at the results in poultry in terms of profitability. Can you talk us through what you're seeing, and expectations through the rest of the year in terms of promotional intensity and pricing there?

Speaker #6: It has remained at the same level. I was expecting, as you rightly said, I think the bottom was Q4 last year.

Ikram Ul Haq: It has remained at the same level. Rashad Dawan, I was expecting, we saw, as you rightly said, I think the bottom was Q4 last year. Q1 was better than Q4. Q2 was better than Q1. I would have loved to report that Q3 has become better than Q2, but it has not. We still see a lot of promotional activities within the poultry segment across the board. The discounting has continued. Happy to report similar, I would say, EBIT margins as we did in Q2, but of course, I would have liked to see the trend going further up as well. This is something we have not seen, at least for the last four or five weeks. Whenever a discounting by one of the players will come down, another player will ramp up the pressure as well. So local market is seeing a lot of discounting as well.

Ikram Ulhaque: It has remained at the same level. Rashad Dawan, I was expecting, we saw, as you rightly said, I think the bottom was Q4 last year. Q1 was better than Q4. Q2 was better than Q1. I would have loved to report that Q3 has become better than Q2, but it has not. We still see a lot of promotional activities within the poultry segment across the board. The discounting has continued. Happy to report similar, I would say, EBIT margins as we did in Q2, but of course, I would have liked to see the trend going further up as well. This is something we have not seen, at least for the last four or five weeks. Whenever a discounting by one of the players will come down, another player will ramp up the pressure as well. So local market is seeing a lot of discounting as well.

Speaker #6: Q1 was better than Q4. Q2 was better than Q1, and I would have loved to report that Q3 has become better than Q2, but it hasn't.

Speaker #6: We still see a lot of promotional activities within the poultry segment across the board. The discounting has continued. I'm happy to report similar, I would say, EBIT margins as we did in Q2.

Speaker #6: But of course, I would have liked to see the trend going further up as well. This is something we haven't seen for at least the last four or five weeks.

Speaker #6: Whenever discounting by one of the players comes down, another player will ramp up the pressure as well. So, the local market is seeing a lot of discounting as well.

Speaker #5: Thank you. Our next question comes from the line of Mohamed Saad. Saad, please unmute yourself locally and go ahead with your question.

Fahad Irfan: Thank you. Our next question comes from the line of Mohammed Saad. Mohammed Saad, please unmute yourself locally and go ahead with your question.

Speaker #8: Thank you. Thank you this

Mohammed Saad: Thank you. Thank you. This is Mohammed Saad from Al Rajhi Capital. Thank you, Aljazira, and thank you, Almarai management, for this opportunity. I just have a couple of questions. My first question is with regards to Egypt. We have seen a phenomenal revenue growth in Egypt. So I would love to hear from you what is going on the ground. What is driving this revenue growth? Is it price? Is it some promotional activities? Is it volume? The growth in revenue that is coming in from Egypt, does it have the same net margin effectively, or are you giving out some heavy promotions to push through your volumes? That is my first question. My second question is about your long-life milk segment.

Muhammad Saad: Thank you. Thank you. This is Mohammed Saad from Al Rajhi Capital. Thank you, AlJazira, and thank you, Almarai management, for this opportunity. I just have a couple of questions. My first question is with regards to Egypt. We have seen a phenomenal revenue growth in Egypt. So I would love to hear from you what is going on the ground. What is driving this revenue growth? Is it price? Is it some promotional activities? Is it volume? The growth in revenue that is coming in from Egypt, does it have the same net margin effectively, or are you giving out some heavy promotions to push through your volumes? That is my first question. My second question is about your long-life milk segment.

Speaker #7: Mohamed Saad from Al Rajhi Capital. Thank you, Al Jazeera, and thank you, Almarai management, for this opportunity. I just have a couple of questions.

Speaker #7: My first question is with regards to Egypt. We have seen phenomenal revenue growth in Egypt, so I would love to hear from you: what's going on on the ground?

Speaker #7: What is driving this revenue growth? Is it price? Is it some promotional activities? Is it volume? And the growth in revenue that is coming in from Egypt, does it have the same net margin effectively, or are you giving out some heavy promotions to push through your volumes?

Speaker #7: That's my first question. My second question is about your long-life milk segment. We saw some pricing in the fresh dairy, but up till now, despite increases in skim milk powder prices, we have not seen any improvement in pricing in the long-life. Any color you can give on when we can see—or if we can see—such an increase in price?

Mohammed Saad: We saw some pricing in the fresh dairy, but up till now, despite increase in skim milk powder prices, we have not seen any improvement in pricing in the long life. Any color you can give on when we can see if we can see such an increase in price? Lastly, we have seen in the SAR 132 million cost, the impact of, I am assuming it includes the impact of both logistics and the impact of higher alfalfa. To what extent is the impact of higher alfalfa and higher logistic cost already being incorporated in the SAR 132 million incremental increase in cost? Or should we expect further increase in cost of goods sold? These are my three questions. Thank you.

Muhammad Saad: We saw some pricing in the fresh dairy, but up till now, despite increase in skim milk powder prices, we have not seen any improvement in pricing in the long life. Any color you can give on when we can see if we can see such an increase in price? Lastly, we have seen in the SAR 132 million cost, the impact of, I am assuming it includes the impact of both logistics and the impact of higher alfalfa. To what extent is the impact of higher alfalfa and higher logistic cost already being incorporated in the SAR 132 million incremental increase in cost? Or should we expect further increase in cost of goods sold? These are my three questions. Thank you.

Speaker #7: And lastly, we have seen, in the 132 million cost, the impact of—I'm assuming it includes the impact of both logistics and the impact of higher alpha.

Speaker #7: To what extent is the impact of higher alpha-alpha and higher logistic cost already being incorporated in the $102 million to $132 million incremental increase in cost?

Speaker #7: Or should we expect a further increase in the cost of goods sold? These are my three questions. Thank you.

Speaker #6: Thank you. Thank you, Saad. So, I'll give you two pieces of good news and one bad news, but let me start in order from what you've asked.

Ikram Ul Haq: Thank you, Saad. I will give you two good news and one bad news, but let me start in order from what you have asked. First question about Egypt. Almarai fantastic growth across the board. It is a volume-led growth. If they are growing by, let us say about 22% or 23%, I would say around 20% is all volume and the balance is just pricing. For me, it is very healthy to see, especially for this quarter, that it is a volume led growth rate. We are doing good across the board. Chilled is doing very well. With chilled, I refer to yogurts. Their expansion into cheese, into long life dairy and juice is also doing extremely well in that respect. Market in Egypt is doing well. You can look at Juhayna results, too. They are also doing very well. I think, market in general in Egypt is performing well.

Ikram Ulhaque: Thank you, Saad. I will give you two good news and one bad news, but let me start in order from what you have asked. First question about Egypt. Almarai fantastic growth across the board. It is a volume-led growth. If they are growing by, let us say about 22% or 23%, I would say around 20% is all volume and the balance is just pricing. For me, it is very healthy to see, especially for this quarter, that it is a volume led growth rate. We are doing good across the board. Chilled is doing very well. With chilled, I refer to yogurts. Their expansion into cheese, into long life dairy and juice is also doing extremely well in that respect. Market in Egypt is doing well. You can look at Juhayna results, too. They are also doing very well. I think, market in general in Egypt is performing well.

Speaker #6: So, first question about Egypt. Alhamdulillah, fantastic growth across the board—it's volume-led growth. If they're growing by, let's say, about 22% or 23%, I would say around 20% is all volume, and the balance is just pricing.

Speaker #6: So for me, it's very healthy to see, especially for this quarter, that it's a volume-led growth rate. We're doing well across the board; chilled is doing very well.

Speaker #6: We're chilled; I refer to yogurts. Their expansion into cheese, into long-life dairy, and juice is also doing extremely well in that respect. The market in Egypt is doing well.

Speaker #6: You can look at Johanna results too. Their Marshall also doing very well. So I think the market in general in Egypt is performing well—not to discount our team efforts.

Ikram Ul Haq: Not to discount our team efforts. They are doing over and above what is required, and it is very healthy to see in that respect. Margins are dilutive. They are still single digits EBIT margins. In terms of profit contribution, it dilutes because our revenue growth is coming from areas where EBIT percentage is lower. That is dilutive in nature when it comes to Egypt. That was your other question. Long life dairy, you are spot on. Today, fresh dairy in Saudi is getting sold, so let us say SAR 7. When I go across the board, I see mixed pricing on long life dairy, SAR 6.2, SAR 6.3, SAR 6.4 on average. So let us say around 10% discount to fresh dairy. We haven't seen any movement, and in that respect, it is up to the market leader. Today, Sadafco owns a very high market share in white milk, in UHT.

Ikram Ulhaque: Not to discount our team efforts. They are doing over and above what is required, and it is very healthy to see in that respect. Margins are dilutive. They are still single digits EBIT margins. In terms of profit contribution, it dilutes because our revenue growth is coming from areas where EBIT percentage is lower. That is dilutive in nature when it comes to Egypt. That was your other question. Long life dairy, you are spot on. Today, fresh dairy in Saudi is getting sold, so let us say SAR 7. When I go across the board, I see mixed pricing on long life dairy, SAR 6.2, SAR 6.3, SAR 6.4 on average. So let us say around 10% discount to fresh dairy. We haven't seen any movement, and in that respect, it is up to the market leader. Today, Sadafco owns a very high market share in white milk, in UHT.

Speaker #6: They are doing over and above, but it's required, and it's very healthy to see in that respect. Margins are dilutive; they are still single-digit EBIT margins.

Speaker #6: So, in terms of profit contribution, it dilutes because our revenue growth is coming from areas where the EBIT percentage is lower. So that's dilutive in nature.

Speaker #6: When it comes to Egypt, that was your other question. Long-life dairy, you are spot on. Today, fresh dairy in Southeast is getting full.

Speaker #6: So let's say seven riyals. When I go across the board, I see mixed pricing on long-life dairy—6.2, 6.3, 6.4 riyals on average.

Speaker #6: So let's say around a 10% discount to fresh dairy. We haven't seen any movement. And in that respect, it's up to the market leader. Today, Sadafco owns a very high market share in white milk in UHT.

Speaker #6: Flavored milk—we do much better. But in the white milk category, they are way ahead in retail, especially. We're doing very well in terms of other channels.

Ikram Ul Haq: Flavored milk, we do much better. But in white milk category, they are way ahead in retail, especially. We are doing very good in terms of other channels. We are doing much better in wholesale. We are doing much better in demand collectors across the board. Non-traditional retail channels, Almarai long life dairy is doing very good as well. But in retail, it is a matter of the market leader and how they are going ahead, and we will follow them in that respect. Your last question was about SAR 100 million. That was the bad news. I wish I could say that we have seen the end of the cost structure, but no, we have only seen part of the alfalfa cost and the SAR 132 cost. I think that number is likely to go further up. Is it SAR 150? Is it SAR 160? Is it SAR 170? Hard for me to give a guidance.

Ikram Ulhaque: Flavored milk, we do much better. But in white milk category, they are way ahead in retail, especially. We are doing very good in terms of other channels. We are doing much better in wholesale. We are doing much better in demand collectors across the board. Non-traditional retail channels, Almarai long life dairy is doing very good as well. But in retail, it is a matter of the market leader and how they are going ahead, and we will follow them in that respect. Your last question was about SAR 100 million. That was the bad news. I wish I could say that we have seen the end of the cost structure, but no, we have only seen part of the alfalfa cost and the SAR 132 cost. I think that number is likely to go further up. Is it SAR 150? Is it SAR 160? Is it SAR 170? Hard for me to give a guidance.

Speaker #6: We're doing much better in wholesale. We're doing much better in demand collectors across the board. So, non-traditional retail channels—Almarai long-life dairy—is doing very well as well.

Speaker #6: But in retail, it's a matter of the market leader and how they're moving ahead. And we'll follow them in that respect. Your last question was about 100 million.

Speaker #6: That was the bad news. I wish I could say that we have seen the end of the cost structure, but no, we've only seen part of the alpha-alpha cost in the 132 cost.

Speaker #6: I think that number is likely to go further up. Is it 150? Is it 160? Is it 170? It's hard for me to give guidance, but that number will definitely go up in Q4.

Ikram Ul Haq: But that number will definitely go up in Q4. The accounting impact of alfalfa is yet to fully reflect, and that's why all options, including efficiency gains by Almarai and the optionality of pricing, remains on the table.

Ikram Ulhaque: But that number will definitely go up in Q4. The accounting impact of alfalfa is yet to fully reflect, and that's why all options, including efficiency gains by Almarai and the optionality of pricing, remains on the table.

Speaker #6: The accounting impact of Alpha Alpha is yet to fully reflect, and that's why all options, including efficiency gains by Almarai and optionality of pricing, remain on the table.

Speaker #5: Thank you, Management. Our next question comes from the line of Mr. Abdulaziz Al Qadhi. Mr. Abdulaziz, please unmute yourself locally and go ahead with your question.

Fahad Irfan: Thank you, management. Our next question comes from the line of Mr. Abdulaziz Alghadi. Mr. Abdulaziz, please unmute yourself locally and go ahead with your question.

Speaker #7: Yeah, thank you, management, and congratulations on the results. Just one question: now that the capex cycle is winding down, how much of the finance cost previously capitalized will be shifted to the P&L, and when do you see the impact start happening?

Abdulaziz Alghadi: Yeah, thank you, management, and congratulations for the results. Just one question. Now that the CapEx cycle is winding down, how much of the finance cost previously capitalized will be shifted to the P&L, and when do you see the impact start happening?

Abdulaziz Al-Kadi: Yeah, thank you, management, and congratulations for the results. Just one question. Now that the CapEx cycle is winding down, how much of the finance cost previously capitalized will be shifted to the P&L, and when do you see the impact start happening?

Speaker #6: So currently, I think we're capitalizing around $260 or $270 billion, if I remember exactly. And that, I think, will probably wind down maybe by $20 or $30 million more.

Ikram Ul Haq: Currently, I think we're capitalizing around SAR 260 or SAR 270 odd million, if I remember exactly. That, I think, will probably wind down maybe by SAR 20, SAR 30 million more. The reason I say that, I look at all those assets under construction. If you look at Almarai today for last year, I think nearly SAR 5 billion were always under assets under construction. If I take off even 90% to 95% of assets as qualifying assets, so let's do a very high level math, SAR 5 billion into 6%, that's SAR 300 million of interest cost that was getting capitalized. Of course, not everything is there, so that's why you only get SAR 260 to SAR 270 million on a TTM basis. This number will gradually come down for sure, because we're winding down the CapEx, but we're still investing for the next five years as well.

Ikram Ulhaque: Currently, I think we're capitalizing around SAR 260 or SAR 270 odd million, if I remember exactly. That, I think, will probably wind down maybe by SAR 20, SAR 30 million more. The reason I say that, I look at all those assets under construction. If you look at Almarai today for last year, I think nearly SAR 5 billion were always under assets under construction. If I take off even 90% to 95% of assets as qualifying assets, so let's do a very high level math, SAR 5 billion into 6%, that's SAR 300 million of interest cost that was getting capitalized. Of course, not everything is there, so that's why you only get SAR 260 to SAR 270 million on a TTM basis. This number will gradually come down for sure, because we're winding down the CapEx, but we're still investing for the next five years as well.

Speaker #6: And the reason I say that, I always look at assets under construction. If you look at Almarai today, for last year, I think nearly 5 billion riyals were always under assets under construction.

Speaker #6: And if I take off even 90 to 95% of assets as qualifying assets, so let's do a very high-level math. $5 billion into 6%, that's $300 million of interest cost that was getting capitalized.

Speaker #6: And of course, not everything is there, so that's why you only get $260 to $270 million on a TTM basis. This number will gradually come down, for sure.

Speaker #6: Because we're winding down the CapEx, but we're still investing for the next five years as well. So, I do expect this number to come down by maybe $30 to $40 million.

Ikram Ul Haq: I do expect this number to come down by maybe SAR 30 to SAR 40 million every year for the next two or three years.

Ikram Ulhaque: I do expect this number to come down by maybe SAR 30 to SAR 40 million every year for the next two or three years.

Speaker #6: Every year for the next two or three years.

Speaker #5: That's clear. Thank you.

Abdulaziz Alghadi: Okay. Thank you.

Abdulaziz Al-Kadi: Okay. Thank you.

Speaker #7: Thank you.

Speaker #5: Thank you. Our next question comes from the line of Mr. Salman Al Rajhi. Mr. Salman, please go ahead with your question. Your line is unmuted.

Fahad Irfan: Thank you. Our next question comes from the line of Mr. Salman Al Rajhi. Mr. Salman, please go ahead with your question. Your line is unmuted.

Speaker #8: Hello, everyone. Thank you, management, for the presentation. I have one question from my side regarding the prices. Recently, over the last quarter, we've seen a price increase on a certain product in fresh dairy.

Salman Al Rajhi: Hello, everyone. Thank you, management, for the presentation. I have one question from my side regarding the prices. Recently, we have seen, or the last quarter, seen a price increase on a certain product on the fresh dairy segment. For the upcoming quarters, if there is a price increase, it will be in other segments such as bakery or other product on the same segment in fresh dairy.

Salman Al-Rajhi: Hello, everyone. Thank you, management, for the presentation. I have one question from my side regarding the prices. Recently, we have seen, or the last quarter, seen a price increase on a certain product on the fresh dairy segment. For the upcoming quarters, if there is a price increase, it will be in other segments such as bakery or other product on the same segment in fresh dairy.

Speaker #8: For the upcoming quarters, if there is a price increase, it will be in other segments, such as bakery, or other products in the same segment in fresh dairy.

Speaker #6: Dr. Salman, I think I'm not going to corner ourselves into one particular segment, product, or category. The importation of feed costs may affect dairy and poultry today.

Ikram Ul Haq: Look, Salman, I am not going to corner ourself into one particular segment or product or category. The importation of feed cost may affect dairy and poultry today, but the issues we are facing in logistic affects all products. If the diesel in UAE is going up by, let us say, 2 rials per liter extra, that is every single category. That is every single product, for example. So I hate to say, we only do here, we will not do there. As I said, we will focus internally first, look at our own cost first, and then depending on the category and the markets, we will take a pricing decision if required.

Ikram Ulhaque: Look, Salman, I am not going to corner ourself into one particular segment or product or category. The importation of feed cost may affect dairy and poultry today, but the issues we are facing in logistic affects all products. If the diesel in UAE is going up by, let us say, 2 rials per liter extra, that is every single category. That is every single product, for example. So I hate to say, we only do here, we will not do there. As I said, we will focus internally first, look at our own cost first, and then depending on the category and the markets, we will take a pricing decision if required.

Speaker #6: But the issues we are facing logistically affect all products. If the diesel price in UAE goes up by, let's say, two riyals per liter extra, that's every single category.

Speaker #6: That's every single product, for example. So, I hate to say we only do here; we will not do there. As I said, we'll focus internally first, look at our own cost first, and then, depending on the category and the market, we will take a pricing decision if required.

Speaker #8: Clear. Thank you so much.

Salman Al Rajhi: Yes. Thank you so much.

Salman Al-Rajhi: Yes. Thank you so much.

Speaker #5: Our next question comes from Mr. Tahir Safiuddin. Mr. Tahir, please unmute yourself locally and go ahead with your question.

Fahad Irfan: Our next question comes from Mr. Taher Sefiedine. Taher, please unmute yourself locally and go ahead with your question.

Speaker #7: Yes. Hi, Ikram. This is Tahir from JPMorgan. There are maybe two questions from my side. The first one is just looking at the current backdrop.

Taher Sefiedine: Yes. Hi, Ikram. This is Taher from JP Morgan. There is maybe two questions from my side. The first one is just looking at the current backdrop. You pushed the price increase on fresh dairy. You are doing quite well on the top line, but clearly that benefits are not filtering through on the bottom line. I just want to understand, given where we are today and clear that there is maybe more to come in terms of cost impact on the P&L, is it fair to assume that the argument for potential margin expansion, in 2027 seems far-fetched at the moment given the impact of this extensive inventory sitting on your balance sheet as it continues to filter through the P&L? Again, with the absence of any new price increases. Is that a fair assumption to look at?

Speaker #7: You pushed a price increase on fresh dairy. You're doing quite well on the top line, but clearly those benefits are not filtering through to the bottom line.

Speaker #7: I just want to understand. I mean, given where we are today, and clearly there is maybe more to come in terms of cost impact on the P&L, is it fair to assume that the argument for potential margin expansion in 2027 seems far-fetched at the moment, given the impact of this extensive inventory sitting on your balance sheet as it continues to filter through the P&L?

Speaker #7: Again, with the absence of any new price increases, is that a fair assumption to look at? And what makes you confident that potentially we can go back into a 14–15% EBIT margin?

Taher Sefiedine: And what makes you confident that potentially we can go back into a 14%, 15% EBIT margin? You think just unwinding of the conflict naturally will help the business go back into that level of margins? I just want to get maybe your thoughts there. That would be my first question.

Speaker #7: Do you think just unwinding the conflict naturally will help the business revert to that level of margins? I just want to get your thoughts there.

Speaker #7: That would be my first question.

Speaker #6: I'll be a bit more optimistic. In that respect, it's easier to say that '27 will not see any margin growth or any other profit growth.

Ikram Ul Haq: I'll be a bit more optimistic in that respect. It's easier to say that 2027 will not see any margin growth or any other profit growth. As of right now, in the absence of any corrective action, your assumption may appear right. But as I said before, Almarai will deploy any options available, including its internal network first, its own supply chain review, and then if there's a need required, there will be pricing action taken as well. If the pricing action is taken, margin expansion will follow through based on the expansion of the product categories, the volume, the poultry, and the new categories we'll be launching. We will talk about at least two or three new categories in the year 2027, and we'll talk about it on 8 October as well.

Ikram Ulhaque: I'll be a bit more optimistic in that respect. It's easier to say that 2027 will not see any margin growth or any other profit growth. As of right now, in the absence of any corrective action, your assumption may appear right. But as I said before, Almarai will deploy any options available, including its internal network first, its own supply chain review, and then if there's a need required, there will be pricing action taken as well. If the pricing action is taken, margin expansion will follow through based on the expansion of the product categories, the volume, the poultry, and the new categories we'll be launching. We will talk about at least two or three new categories in the year 2027, and we'll talk about it on 8 October as well.

Speaker #6: As of right now, in the absence of any corrective action, your assumption may appear right. But as I said before, Almarai will deploy any options available, including its internal network first, its own supply chain review, and then, if there is a need, there will be pricing action taken as well.

Speaker #6: And if the pricing action is taken, margin expansion will follow through based on the expansion of the product categories, the volume, the poultry, and the new categories we will be launching.

Speaker #6: We will talk about at least two or three new categories in the year '27, and we'll talk about it on the 8th of October as well.

Speaker #6: So, for us, the volume expansion—all the 5 billion riyals we've been spending over the last two or three years—you will now see the result of that.

Ikram Ul Haq: For us, the volume expansion, all the SAR 5 billion we've been spending over the last two or three years, you will now see the result of that. You will see how Almarai will be launching the beef, which we've announced to the market, the seafood, the premier food factory. For me, the volume story remains very bullish. The top-line story remains very exciting. The issue remains what's happening in the conflict, and once we take away the short-term impact of that, and whenever the reversal happens, it could happen tomorrow, next week, first week of January, or could be later as well. This is what gives me confidence that the underlying commercial engine is running very smoothly and running at a beautiful speed. The other part, which are temporary shocks, we're able to manage that and we'll take actions accordingly as it comes through.

Ikram Ulhaque: For us, the volume expansion, all the SAR 5 billion we've been spending over the last two or three years, you will now see the result of that. You will see how Almarai will be launching the beef, which we've announced to the market, the seafood, the premier food factory. For me, the volume story remains very bullish. The top-line story remains very exciting. The issue remains what's happening in the conflict, and once we take away the short-term impact of that, and whenever the reversal happens, it could happen tomorrow, next week, first week of January, or could be later as well. This is what gives me confidence that the underlying commercial engine is running very smoothly and running at a beautiful speed. The other part, which are temporary shocks, we're able to manage that and we'll take actions accordingly as it comes through.

Speaker #6: You will see how Almarai will be launching the beef, which we have announced to the market, the seafoods, and the premier food factory. So, for me, the volume story remains very bullish.

Speaker #6: The top-line story remains very exciting. They should remain aware of what's happening in the conflict. Once we take away the short-term impact of that, and whenever the reversal happens—it could happen tomorrow, next week, the first week of January, or could be later as well.

Speaker #6: This is what gives me confidence that the underlying commercial engine is running very smoothly, and running at a beautiful speed. The other part, which are temporary shocks—we're able to manage that, and we'll take actions accordingly as it comes through.

Speaker #7: Okay, all right. Very clear. Maybe just the second question on the poultry. I mean, we are in the midst of more capacity coming through.

Taher Sefiedine: Okay. All right. Very clear. Maybe just the second question on the poultry. We are in the midst of more capacity coming through over maybe the next two years or so. Just to understand, you highlighted maybe the challenges in terms of trading performance because of discounting and promotions in the market. Just how confident are you that bringing more capacity to the market will be absorbed? I know you talked before and you were quite happy with utilization that new volumes coming in are actually being sold. I just want to get maybe your thoughts, how will the poultry market look in the next year or two? The smaller players continue maybe to make losses. They continue to discount. You guys are following through maybe on that in terms of pricing, and now there is more volumes coming in. I just maybe want to get your thoughts.

Speaker #7: Over maybe the next two years or so, just to understand—I mean, you highlighted the challenges in terms of trading performance because of discounting and promotions in the market.

Speaker #7: Just how confident are you that bringing more capacity to the market will be absorbed? I know you talked before and you were quite happy with utilization—that new volumes coming in are actually being sold.

Speaker #7: I just want to get maybe your thoughts. How will the poultry market look in the next year or two? I mean, the smaller players continue, maybe, to make losses.

Speaker #7: They continue to discount. You guys are following through, maybe, on that in terms of pricing, and now there's more volume coming in. So I just want to get your thoughts.

Speaker #7: Are you comfortable about the return on investment on the poultry CAPEX, given that we could be sitting at around 400 million birds, maybe in two years from now?

Taher Sefiedine: Are you comfortable about the return on investment on the poultry CapEx, given that we could be sitting at around 400 million birds maybe in 2 years from now? Maybe just your thoughts there in terms of the poultry segment and potentially what kind of EBIT margin, if that's the right way to look at it, you would be happy with for the poultry business on a sustainable basis?

Speaker #7: So maybe just your thoughts there in terms of the poultry segment, and potentially what kind of EBIT margin—if that's the right way to look at it—you would be happy with for the poultry business on a sustainable basis?

Speaker #6: This is so wise. Would you allow me to answer?

[Company Representative] (Almarai): This is Sobhuj. Would you allow me to answer? I think poultry is another story for the whole market. Today, as you rightly mentioned, it's heavily discounted. If you see the poultry markets in 3 different areas. One, the market today is divided into 3 segments. One fresh, frozen, and cuts. When you look to the cuts is almost worth of SAR 7 to 8 billion worth of market size, and majority of it is imported. Second part, frozen. Frozen, mainly it is also imported. The majority of the local players are playing heavily on fresh.

Speaker #7: Pardon.

Speaker #6: Shukran. I think poultry is another story for the whole market. Today, as you rightly mentioned, it's heavily discounted. And if you see the poultry markets in three different areas...

Speaker #6: First, the market today is divided into three segments: fresh, frozen, and cuts. When you look at the cuts segment, it’s almost worth seven to eight billion reais in market size, and the majority of it is imported.

Speaker #6: Second part, frozen—frozen mainly is also imported. And the majority of the local players are focusing heavily on fresh. Now, considering the expansion that companies like Almarai and the rest of the market are doing, I think there is an effort that we are making as well with the government to regulate a few things, so if you picture it, it is closing the taps in a way where we could have an open market for local players.

[Company Representative] (Almarai): Now, considering the expansion that companies are doing in Almarai and the rest of the market, I think there are an effort that we are doing as well, or with the government to regulate few things that if you make sure it is closing the taps in a way where we could have an open market for local players. I think that's something that we personally capitalize on this and hopefully that soon we'll be able to realize. If that's happening, which will open up an opportunity for Almarai and for the rest of the market.

Speaker #6: And I think that's something that we personally capitalize on. Hopefully, soon we'll be able to realize that, and if that's happening, it will open up an opportunity for Almarai and for the rest of the market.

Speaker #7: Okay. And is there any color on the potential EBIT margin that we could look at once Marai ramps up to 400 million birds and this capex cycle is behind us?

Taher Sefiedine: Okay. Is there any color on the potential EBIT margin that we could look at once Almarai ramps up to 400 million birds and this CapEx cycle is behind us?

Speaker #6: You can expect at least two to three basis point improvements on top of it. So, look at net income at 11%. You can add three or four percent for, let's say, the EBIT bridge.

Ikram Ul Haq: You can expect at least 2 to 3 basis point improvement on top of it. You look at net income at 11%, you can add 3%, 4% for, let's say, the EBIT bridge, and then the full utilization should give us another at least 2 to 300 basis point, or let's say 2% to 3%.

Ikram Ulhaque: You can expect at least 2 to 3 basis point improvement on top of it. You look at net income at 11%, you can add 3%, 4% for, let's say, the EBIT bridge, and then the full utilization should give us another at least 2 to 300 basis point, or let's say 2% to 3%.

Speaker #6: And then the full utilization should give us another at least 200 to 300 basis points, or let's say 2 to 3 percent.

Speaker #5: Thank you, Management. Our next question comes from Mr. Harsh Kadam. Harsh, please unmute yourself locally and go ahead with your question.

Fahad Irfan: Thank you, management. Our next question comes from Mr. Harsh Gadham. Harsh, please unmute yourself locally and go ahead with your question.

Speaker #7: Thank you for the opportunity, management. I want to ask about the channel growth, wherein the export channel has seen volatile growth—let's say, a negative single digit in the first quarter, 47% in the second quarter, and then again a single-digit growth in the third quarter.

Harsh Gadham: Thank you for the opportunity, management. I want to ask about the channel growth, wherein export channel has been seen a volatile growth, let's say like a negative single digit in Q1, 47% in Q2, and then again a single digit growth in Q3. I would like the management to shed some light on this. My another question is on inventory. You had around 6 months of coverage in last quarter, and now it has went down to 4 months of coverage. How does the management plan to manage the inventory levels going forward? Because you will have to replenish it at some time once it gets over. How would it be done with keeping the pricing intact or similar rates? Thank you.

Harsh Kadam: Thank you for the opportunity, management. I want to ask about the channel growth, wherein export channel has been seen a volatile growth, let's say like a negative single digit in Q1, 47% in Q2, and then again a single digit growth in Q3. I would like the management to shed some light on this. My another question is on inventory. You had around 6 months of coverage in last quarter, and now it has went down to 4 months of coverage. How does the management plan to manage the inventory levels going forward? Because you will have to replenish it at some time once it gets over. How would it be done with keeping the pricing intact or similar rates? Thank you.

Speaker #7: I would like the management to shed some light on this. And my other question is about inventory. You had around six months of coverage in the last quarter.

Speaker #7: And now it has gone down to four months of coverage. So how does management plan to manage the inventory levels going forward? Because you'll have to replenish them at some point once they run out.

Speaker #7: So, how would it be done while keeping the pricing intact or at similar rates? Thank you.

Speaker #6: Thank you, Harsh. So, look, on your first point, exports are volatile by nature. Imagine selling an order to Iraq for powdered baby food. It's not something that follows a weekly trend or a daily push, per se.

Ikram Ul Haq: Well, look, on your first one, export is volatile by nature. Imagine selling an order to Iraq on baby food powder. It is not something that follows a weekly trend or a daily push per se. You get one or two big orders, then you see a huge growth and it starts to come down. When we look at export orders, we prefer like a TTM basis to the TTM basis. That is always a better way of looking into it. You can do yearly, but during the quarters, that is how I look into. Like this quarter, there were some delays in export, let's say, food category to some of the countries, and that looks bad. But again, you will catch up on it in the next quarter. It is the nature of the product itself that is very choppy per se.

Ikram Ulhaque: Well, look, on your first one, export is volatile by nature. Imagine selling an order to Iraq on baby food powder. It is not something that follows a weekly trend or a daily push per se. You get one or two big orders, then you see a huge growth and it starts to come down. When we look at export orders, we prefer like a TTM basis to the TTM basis. That is always a better way of looking into it. You can do yearly, but during the quarters, that is how I look into. Like this quarter, there were some delays in export, let's say, food category to some of the countries, and that looks bad. But again, you will catch up on it in the next quarter. It is the nature of the product itself that is very choppy per se.

Speaker #6: You get one or two big orders, and you see a huge growth, and then it starts to come down. When we look at export orders, we prefer a KTTM basis to the TTM basis.

Speaker #6: That's always a better way of looking into it. You can do yearly, but during the quarters, that's how we look into it. Like this quarter, there were some delays in export, and let's say in the food category to some of the countries.

Speaker #6: And that looks bad. But again, you'll catch up on it in the next quarter. So, it's the nature of the product itself that is very choppy, per se.

Speaker #6: When I look at your next question, it was about an inventory issue. Look, for inventory, we are maintaining different levels for different types of inventory. We may not be carrying such inventory for packaging because it's produced locally, and we can manage that easily.

Ikram Ul Haq: When I look at the. Your next question was about inventory issue. Look, inventory, we are maintaining different levels for different types of inventory. We may not be carrying such inventory for packaging because it is produced locally and we can manage that easily. But for some of the products like alfalfa, which we might carry more than one year, corn and soya, we might carry couple of quarters. The same goes for different category. Like flour, we do not carry because the government is supplying for this one. For me, it is very different on different categories and different inputs as well. We manage each part separately as well. Our BUs look into it by product, by material as well. In general, we are carrying, as I said, a higher level of stock. When I talk about 108 days, it is a general assumption.

Ikram Ulhaque: When I look at the. Your next question was about inventory issue. Look, inventory, we are maintaining different levels for different types of inventory. We may not be carrying such inventory for packaging because it is produced locally and we can manage that easily. But for some of the products like alfalfa, which we might carry more than one year, corn and soya, we might carry couple of quarters. The same goes for different category. Like flour, we do not carry because the government is supplying for this one. For me, it is very different on different categories and different inputs as well. We manage each part separately as well. Our BUs look into it by product, by material as well. In general, we are carrying, as I said, a higher level of stock. When I talk about 108 days, it is a general assumption.

Speaker #6: But for some of the products like alfalfa, which we might carry for more than one year, corn and soya, we might carry for a couple of quarters.

Speaker #6: And the same goes for different categories. Like flour—we don't carry it because the government is supplying for this one. So for me, it's very different across different categories and different inputs as well.

Speaker #6: We manage each part separately as well. Our BUs look into it by product, by material as well. In general, we are carrying, as I said, a higher level of stock.

Speaker #6: When I talk about 108 days, it is a general assumption. Of course, as I said, this will mean we'll carry 12 months of alfalfa, maybe one month of packaging.

Ikram Ul Haq: Of course, as I said, this will mean we will carry 12 months of alfalfa, maybe one month of packaging. For me, that is more critical too. When I talk at a group level, it is an average. But the real work is done by material, by BU, which happens every day within our supply chain team.

Ikram Ulhaque: Of course, as I said, this will mean we will carry 12 months of alfalfa, maybe one month of packaging. For me, that is more critical too. When I talk at a group level, it is an average. But the real work is done by material, by BU, which happens every day within our supply chain team.

Speaker #6: So, for me, that's more critical. When I talk at a group level, it's an average. But the real work is done by material, by BU, which happens every day within our supply chain team.

Speaker #5: Thank you, management. In the interest of time, I would request everyone to please limit your questions to one at a time, as we have a long list of raised hands.

Fahad Irfan: Thanks, management. In the essence of time, I would request everyone to please limit your question to one at a time as we have a long list of raised hands. That said, our next question comes from Mohammed Al-Rasheed. Mr. Al-Rasheed, please unmute yourself locally and go ahead with your question.

Speaker #5: That said, our next question comes from Muhammad Al-Rashid. Mr. Al-Rashid, please unmute yourself locally and go ahead with your question.

Speaker #7: Hi, good afternoon. Assalamualaikum. Thank you, gentlemen, for the call. Just one follow-up question to the point you mentioned, Ikram, regarding targeting to increase by at least $300–400 million per year.

Mohammed Al-Rasheed: Good afternoon. As-salamu alaykum. Thank you, gentlemen, for the call. Just one follow-up question to the point you mentioned, Ikram, of targeting to increase EBITDA by at least SAR 300 million to SAR 400 million per year. Just to clarify, is this inclusive of the normalization of shipping costs, or is this purely driven by volumetric growth and associated operating leverage? Normalization of cost would be on top of that.

Speaker #7: Just to clarify, is this inclusive of the normalization of shipping cost, or is this purely driven by volumetric growth and associated operating leverage? And the normalization of cost would be on top of that.

Speaker #6: No, it's exclusive, so normalization would be on top of it.

Ikram Ul Haq: No, it's exclusive. So normalization would be on top of it.

Ikram Ulhaque: No, it's exclusive. So normalization would be on top of it.

Speaker #5: Thank you, management. Our next question comes from the line of Mr. Adnan Farooq. Mr. Adnan, please unmute yourself locally and go ahead with your question.

Fahad Irfan: Thank you, management. Our next question comes from the line of Mr. Adnan Farooq. Mr. Adnan, please unmute yourself locally and go ahead with your question.

Speaker #7: Hi. Assalamualaikum. Thank you for the presentation. I just wanted to get a sense, given you have made substantial investments in your organizational capability, sales capability, and distribution infrastructure over the past several years.

Adnan Farooq: Hi. Thank you for the presentation. I just wanted to get a sense on, given you have made substantial investments in your organization capability, sales capability, distribution infrastructure for the past several years, how should we view your operating cost growth over the next few years? Would you be able to segregate the increase in costs that you experienced during the quarter of what is more sticky and what is because of geopolitical situation?

Speaker #7: How should we view your operating cost growth over the next few years? And would you be able to segregate the increase in costs that you experienced during the quarter, identifying what is more sticky and what is due to the geopolitical situation?

Speaker #6: Thanks, Adnan. We're getting into the management area in much more detail, but your question is valid. When we look at the supply chain increases going forward, I would say we will definitely have leverage in terms of having higher synergies in that area.

Ikram Ul Haq: Thanks, Adnan. We're getting into management area much more detail, but your question is valid. When we look at the supply chain increases going forward, I would say we will definitely have a leverage in terms of having higher synergies in that area. All the depots and all the vans you see, we will have more benefit going through. Will that be growing in line with volume or revenue? I would say it will be more or less there, because we always like to have some added capacity. But looking into for the next five or six years, we look at higher volume throughput coming through. By definition, it will give us synergy. So on a long-term basis, on a three- to five-year basis, I expect benefits to show up in our P&L in that respect.

Ikram Ulhaque: Thanks, Adnan. We're getting into management area much more detail, but your question is valid. When we look at the supply chain increases going forward, I would say we will definitely have a leverage in terms of having higher synergies in that area. All the depots and all the vans you see, we will have more benefit going through. Will that be growing in line with volume or revenue? I would say it will be more or less there, because we always like to have some added capacity. But looking into for the next five or six years, we look at higher volume throughput coming through. By definition, it will give us synergy. So on a long-term basis, on a three- to five-year basis, I expect benefits to show up in our P&L in that respect.

Speaker #6: All the depots and all the vans you see—we will have more benefit going through. Will that be growing in line with volume or revenue?

Speaker #6: I would say it will be more or less there, because we always like to have some added capacity. But looking into the next five or six years, we expect higher volume throughput coming through.

Speaker #6: By definition, it will give us synergy. So, on a long-term basis, on a three- to five-year basis, I expect benefits to show up in our P&L in that respect.

Speaker #6: I don't want to commit to a volume or revenue growth target in that perspective. In terms of the current quarter, the stickiness—look, the cost of diesel in neighboring countries, how sticky they are—it's hard for me to say.

Ikram Ul Haq: I do not want to commit to a volume or a revenue growth target in that perspective. In terms of current quarter, the stickiness, look, the cost of diesel in neighboring countries, how sticky they are, it is hard for me to say. A lot of the costs we are witnessing, their nature, I would like to admit that they are temporary in nature, but you never know with these things. We have seen costs that we thought during COVID times that are temporary in nature, and they have stuck with us for the last 5 years. So I cannot quantify the impact of those costs of the nature as we speak today. But as we go forward, we will be very transparent, and we will show it to you guys what is increasing and what is not.

Ikram Ulhaque: I do not want to commit to a volume or a revenue growth target in that perspective. In terms of current quarter, the stickiness, look, the cost of diesel in neighboring countries, how sticky they are, it is hard for me to say. A lot of the costs we are witnessing, their nature, I would like to admit that they are temporary in nature, but you never know with these things. We have seen costs that we thought during COVID times that are temporary in nature, and they have stuck with us for the last 5 years. So I cannot quantify the impact of those costs of the nature as we speak today. But as we go forward, we will be very transparent, and we will show it to you guys what is increasing and what is not.

Speaker #6: A lot of the cost we are witnessing, their nature, I would like to admit that they are temporary in nature, but you never know with these things.

Speaker #6: We have seen costs that we thought during COVID time were temporary in nature, and they have stuck with us for the last five years.

Speaker #6: So, I can't quantify the impact of those costs to nature as we speak today. But as we go forward, we'll be very transparent and we'll show you what's increasing and what's not.

Speaker #5: Thank you. Our next question comes from Dana Aranjari. Dana, please proceed with your questions and unmute yourself locally.

Fahad Irfan: Thank you. Our next question comes from Dana Ranjari. Dana, please proceed with your questions and unmute yourself quickly.

Speaker #8: Hello, thank you for taking my question. My question is on your new investments. Your recent ROIC, your incremental ROIC, has been below the hurdle rates.

Dana Ranjari: Hello. Thank you for taking my question. My question is on your new investments. Your recent ROIC has, your incremental ROIC has been below the hurdle rate. When do you expect these returns to rise, and what will drive this improvement?

Dana Al-Anjari: Hello. Thank you for taking my question. My question is on your new investments. Your recent ROIC has, your incremental ROIC has been below the hurdle rate. When do you expect these returns to rise, and what will drive this improvement?

Speaker #8: When do you expect these returns to rise, and what will drive this improvement?

Speaker #6: Nana, good observation. The returns, as I said, are heavily impacted by the costs that we are seeing because of the ongoing conflict. We are facing costs in excess of 500 to 600 million riyals on an annualized basis.

Ikram Ul Haq: Dana, good observation. The returns, as I said, are heavily impacted by the cost that we are seeing because of that armed conflict. We are facing costs in excess of SAR 500 million to SAR 600 million on an annualized basis. Of course, not all the cost is coming in. And that is the factor diluting our ROIC on an incremental basis. On top of it, we are seeing a lot of investment done, but they have not come online. My request would be to observe Almarai for the next 6 quarters. You will see at least 5, if not 6 major announcements where you will see the return of the asset under construction into asset into play. You will see multiple categories coming on time.

Ikram Ulhaque: Dana, good observation. The returns, as I said, are heavily impacted by the cost that we are seeing because of that armed conflict. We are facing costs in excess of SAR 500 million to SAR 600 million on an annualized basis. Of course, not all the cost is coming in. And that is the factor diluting our ROIC on an incremental basis. On top of it, we are seeing a lot of investment done, but they have not come online. My request would be to observe Almarai for the next 6 quarters. You will see at least 5, if not 6 major announcements where you will see the return of the asset under construction into asset into play. You will see multiple categories coming on time.

Speaker #6: Of course, not all the costs are coming in, and that's the factor diluting our ROIC on an incremental basis. On top of that, we are seeing a lot of investment being done, but they haven't come online yet.

Speaker #6: My request would be to observe Almarai for the next six quarters. You will see at least five, if not six, major announcements, where you will see the return of the asset under construction into asset into play.

Speaker #6: You will see multiple categories coming on line. You will see multiple growth streams coming online, and that's when you will start to see why we believe in the return of these assets going forward.

Ikram Ul Haq: You will see multiple growth streams coming online, and that is when you will start to see why we believe in the return of these assets going forward, and you will see the ROE rising as well.

Ikram Ulhaque: You will see multiple growth streams coming online, and that is when you will start to see why we believe in the return of these assets going forward, and you will see the ROE rising as well.

Speaker #6: And you see the ROI rising as well.

Fahad Irfan: Thank you, management. Ladies and gentlemen, that marked the final question of our session. If anyone has any unresolved queries, you are more than welcome to reach Almarai's IR team. On behalf of Aljazira Capital, we would like to extend our sincere thanks to the management of Almarai and participants for taking the time for the call. I will now hand back to the management for closing remarks.

Fahad Irfan: Thank you, management. Ladies and gentlemen, that marked the final question of our session. If anyone has any unresolved queries, you are more than welcome to reach Almarai's IR team. On behalf of AlJazira Capital, we would like to extend our sincere thanks to the management of Almarai and participants for taking the time for the call. I will now hand back to the management for closing remarks.

Speaker #5: Thank you, management. Ladies and gentlemen, that marks the final question of our session. If anyone has any unresolved queries, you are more than welcome to reach out to Almarai's IR team.

Speaker #5: And on behalf of Al Jazeera Capital, we'd like to extend our sincere thanks to the management of Almarai and participants for taking their time for the call.

Speaker #5: I will now hand back to the management for closing remarks.

Speaker #7: Thank you for thank you to all the participants. Thank you to our CEO, Mr. Fawad Al-Jaz, and our CFO, Mr. Ikram Al-Haq. And if you have any questions, please feel free to reach out to investors dot relation at Almarai dot com.

Abdulhadi Alamri: Thank you, Fahad. Thank you to all the participants. Thank you to our CEO, Mr. Fawaz Aljasser, and our CFO, Mr. Ikram Ul Haq. If you have any questions, please feel free to reach out to investor.relations@almarai.com. Thank you, everyone.

Abdulhadi Alamri: Thank you, Fahad. Thank you to all the participants. Thank you to our CEO, Mr. Fawaz Aljasser, and our CFO, Mr. Ikram Ulhaque. If you have any questions, please feel free to reach out to investor.relations@almarai.com. Thank you, everyone.

Speaker #7: Thank you everyone.

Speaker #5: Thank you everyone.

Operator: Thank you, everyone.

Fawaz Aljasser: Thank you, everyone.

Speaker #1: This webinar is no longer being recorded.

Operator: This webinar is no longer being recorded. This webinar is being transcribed and summarized.

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Q3 2026 Almarai Co Ltd Earnings Call

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