Tanmiah Food Company ("Tanmiah" or the "Company", 2281 on the Saudi Exchange), a market leading provider of fresh and processed poultry and other meat products, animal feed and health products, and a foods brand franchise operator, today announced its results for the first half ended 30 June 2022, with a 31% year-on-year (YoY) growth in revenues to SR965.9 million. Gross margin improved to 23.3% from 22.8% in H1-2021, while EBITDA of SR107.5 million (+30% YoY), yielded a margin of 11.1%. Net income increased 43% YoY from SR22.2 million to SR31.7 million, on the back of the robust topline performance and gradual price increases in the fresh chicken category. Zulfiqar Hamadani CEO of Tanmiah, commented:"We have continued to successfully execute our capacity expansion program, resulting in solid topline performance as Tanmiah's products continued to grow in popularity during the first half of the year as we drive innovation across all our product lines. The recent completion of refurbishment projects at our Majmah facility to reach a capacity of 420,500 birds per day (net of rental capacity) will further boost revenues and profitability in the upcoming quarters and is a major milestone in our goal to reach a production capacity of 1.2 million birds per day by 2025. Despite the volatility in global commodity prices, our strong market positioning, and the increasing preference by customers for our diversified product offerings has enabled us to mitigate this impact by carefully managing pricing, thus resulting in margin improvement during the period. As we embark on a new phase in Tanmiah's journey through the landmark partnership with Tyson Foods, we expect to unlock substantial long-term value for our shareholders by enhancing all stages of the value chain, along with diversifying our product offerings, and expanding our global footprint. Collectively, we will continue to significantly invest in our business to raise production capacity further and meet the expected rising demand that could be captured through the potential launch of a new Global Halal brand with Tyson, which may be marketed worldwide." Ahmed Osilan, Executive Board Member & Managing Director of Tanmiah said: "We are proud to have achieved major milestones since the start of the year, including the strategic partnership with Tyson Foods. Our sustained investments in ramping up production capacity and strengthening our long-standing relationships with our key business partners, have rewarded us with a robust performance during the period, whereby we have successfully attained a remarkable growth in profitability. We are delighted to be taking our company to a whole new level, by advancing our technical expertise and tapping new opportunities for realizing wide-ranging synergies across the group, whilst accelerating our pace of growth. Further supporting our strategic growth plans is the SR150 million financing facility recently secured by our subsidiary, ADC, from the Agriculture Development Fund. This forms part of a comprehensive bundle of loans that are aligned to the Government's ongoing initiatives to boost food production. We remain committed to our pioneering role in reinforcing Saudi Arabia's food security and self-sufficiency goals, through enriching the domestic ecosystem by bringing world-class sector expertise to the Kingdom and creating a number of job opportunities in the local market, which will emerge as a result of our significant partnership with Tyson Foods." Revenue Analysis Tanmiah reported first half revenues of SR965.9 million, up 31% YoY from SR734.9 million. Top-line growth was driven by strong performance across all segments, in particular fresh poultry and further processed products, reflecting a combination of both price and volume effect. Fresh Poultry sales, comprising 69% of total revenues, increased 31% YoY to SR666.2 million from SR510.7 million in the similar period of last year. Fresh poultry revenue growth was driven by a continued expansion of capacity, leading to sustained volume growth, in line with the rising popularity of Tanmiah's products, as well as a gradual increase in prices across the fresh chicken category. The Group had ended 2021 with daily capacity of 370,000 birds and increased it to 420,500 birds per day (net of rental capacity), marking a 13.6% growth, following the upgrade of Tanmiah's facility in Majmah, north of Riyadh. Further Processed Products revenues grew by 31% YoY to SR199.0 million during H1-2022. This increase in sales comes on the back of growth in demand from the food service channel, and a gradual revision of prices for key food service customers during contract renewals. Feed and animal health revenues grew by 26% to SR91 million in the H1-2022, predominantly due to the increasing demand for animal health products and equipment. Food franchise operator revenues amounted to SR9.8 million in H1-2022, with Q2 reflecting the second full quarter since the launch of the food franchise vertical. During the period, Tanmiah opened a total of 6 POPEYES® stores in KSA, bringing the total to 10 operational outlets as of 30 June 2022. Growth Strategy Tanmiah's strategy to further reinforce its market positioning hinges on both organic and inorganic growth. In order to capture lucrative opportunities from rising demand for poultry, coupled with the Kingdom's strategic goal of attaining 80% self-sufficiency in the poultry sector by 2025, Tanmiah continues to invest substantially on capacity expansion and continues to make good progress in this regard. The Company has increased its local sales of fresh chicken by 9% YoY from 49.2 million chickens in H1-2021 to 53.5 million chickens in H1-2022, as a result of sustained investments in its assets and operations. Tanmiah has recently completed the refurbishment of its facility in Majmah, which has resulted in increasing its total production capacity to 420,500 birds per day (net of rental capacity), from 370,000 birds per day at the end of 2021. Another key event for Tanmiah is the strategic partnership with Tyson Foods. Tanmiah considers this partnership an important milestone in its 60-year journey, demonstrating its commitment to its pioneering role in reinforcing the Saudi Arabia's food security and self-sufficiency goals. The partnership will also enable Tanmiah to gain exposure to global industry know-how and could lead to emerging opportunities in the fast-growing Halal market. By capitalizing on this significant collaboration, Tanmiah will be well-positioned to enhance its product, customer, and geographical diversification, and deliver substantial value through advancing its operational processes, which will enable the Company to realize material operational efficiencies and improve its revenues and profitability going forward. Tanmiah has continued to capitalize other strategic initiatives by the government to reinforce the domestic food sector, whereby the Company has obtained a short-term financing facility of SR150 million from Agricultural Development Fund (ADF) to finance the import of grains. Moreover, Tanmiah has recently secured a EUR 48.2 million long term Shariah compliant facility from Rabobank to further support its expansion program.
