Almunajem Foods Co. of Saudi Arabia has initiated discussions to purchase a minority stake in Al Jouf Agricultural Development Company, a local agribusiness. The company announced the potential investment in a stock exchange filing on January 19, stating it aligns with its strategy for growth and strengthening its position in the food sector.
Al Jouf, established in 1988, cultivates fruits, vegetables, and grains including potatoes, onions, and wheat. Its operations also extend to producing olive oil, honey, pickles, and French fries, according to its website.
Almunajem Foods, primarily involved in poultry production and processing, is exploring a transaction to subscribe to new Al Jouf shares priced at SR52.5 ($14) each. In the filing, the company noted this initiative is part of efforts to enhance integration across the food value chain, evaluate investment opportunities consistent with long-term objectives, support food security, diversify growth sources, and create added value for shareholders.
Any potential agreement between Almunajem Foods and Al Jouf is pending internal approvals at both companies and regulatory clearance from relevant authorities.
These talks follow Almunajem Foods' recent seven-year processing and distribution agreement with Balady Poultry in Saudi Arabia. The company markets over 800 products, operates one factory and 13 branches, with a total production capacity of about 58,000 metric tonnes and more than 2,100 employees, as per its website.
Last month, Almunajem received the first tranche of a long-term loan from the Saudi Industrial Development Fund, amounting to SR11.6 million out of a total approved facility of SR97.3 million. This funding will partially finance capital expenditure for expanding its food production facility in Jeddah, designed to have an annual production capacity of 35,000 tonnes.
Installation of manufacturing line equipment is scheduled to begin this quarter, with commercial operations expected to start in the second quarter of this year.
Almunajem Foods issued its third-quarter and year-to-date results in November. Revenue for the three months to September 30 rose 2.2% to SR816.1 million, attributed to increased volumes across all categories despite a drop in average selling prices. Operating profit fell 5.2% to SR36.4 million, and net profit dropped 21.7% to SR31.7 million.
Nine-month revenue dipped 0.5% to SR2.51 billion, while operating profit decreased 46% to SR118.3 million. Net profit was down 52% at SR102.7 million.
Almunajem Foods supplies chicken, turkey, duck, and quail, and owns the Dari brand.