Savola Third-Quarter Profit Increases 4.6% on Sales

By Matthew Brown

Oct. 26 (Bloomberg) -- Savola Al Azizia United Co., Saudi Arabia's largest food producer by market value, said third- quarter profit advanced 4.6 percent on higher sales.

Net income rose to 158 million riyals ($42.2 million) from 151 million riyals a year earlier, Savola said in a statement to the Saudi bourse today. The company didn't release earnings per share for the period. Savola's net income fell 41 percent on a quarter-on-quarter basis.

``Some people will be disappointed with the results, because they showed a quarter-on-quarter decline in both net profit and earnings before interest and taxes,'' Laurent- Patrick Gally, retail analyst at U.A.E.-based investment bank Shuaa Capital PJSC, said in a phone interview from Dubai today.

The NNS edible oil soya bean price index declined by 14 percent in the third quarter, Bloomberg data shows. Savola said May 3 that it plans to build a $350 million sugar beet refinery in Egypt.

``The decline was driven by the new Egyptian sugar operations, which are in start-up mode and posted losses, and a rapid decline in world edible oil prices, which has put pressure on the margins of the wholesale side of this business,'' said Gally.

Nine-month sales increased to 10.2 billion riyals from 7.8 billion riyals.

Savola shares lost as much as 2 riyals, or 9.3 percent, to 19.95 riyals in Riyadh trading. The shares were at 20.65 riyals at 11:41 a.m. local time, valuing the company at 10.3 billion riyals. The stock has lost 42 percent this year.

To contact the reporter on this story: Matthew Brown in Dubai at mbrown42@bloomberg.net