The profits of the National Agricultural Development Company (NADEC) declined by 44% year-on-year in the second quarter of this year, reaching 6.4 million riyals, recording a decline for the fourth consecutive quarter, despite revenue growth supported by the protein and agriculture sectors.

According to the Financial Analysis Unit of Al-Eqtisadiah, based on the company's financial results, the profitability pressures mainly came from higher feed and shipping costs and additional fees related to regional maritime disruptions, along with increased distribution costs, lower treasury income, and a higher share of losses from a joint venture.

Sun, 03 2026

NADEC's revenues rose by 5.5% year-on-year in the second quarter, equivalent to about 46 million riyals, reaching 876.4 million riyals, compared to 830.5 million riyals in the same period last year.

Revenue growth was driven by a 99% increase in protein segment sales and a 41% growth in agricultural segment sales, partially offsetting the decline in dairy and food processing segment sales, which is one of the company's main activities.

However, sales growth did not reflect on net profit, as the cost of sales to revenue ratio rose by about 9.2% compared to the same quarter last year, due to the exceptional increase in feed and shipping costs and additional fees related to regional maritime disruptions.

The direct financial impact of these cost increases amounted to about 45 million riyals in the quarter, an amount close to the entire increase in the company's revenues during the period, limiting its benefit from sales growth and leading to a decline in profitability margins.

NADEC's management expects the exceptional cost pressures to ease as the regional operating environment returns to normal, which may alleviate the burdens related to shipping and feed in the coming periods.

The company's operating profit declined by 28.2% to 78.6 million riyals in the second quarter, compared to 109.5 million riyals in the same period, impacted by higher cost of sales and selling and marketing expenses, despite the positive effect of revenue growth.

Thu, 14 2024

Selling and marketing expenses rose 5.4% year-on-year due to higher distribution costs, while other expenses increased by about 7.8 million riyals due to higher losses from the sale of biological assets.

The decline in treasury income pressured results, falling by about 9.2 million riyals compared to the same quarter, due to lower returns on Murabaha deposits with banks.

The company also recorded losses of 9.1 million riyals representing its share of losses from its investment in Al-Ra'ie National Livestock Company for 2025 and the first half of 2026, compared to limited losses of half a million riyals in the comparable period.

NADEC had announced in May the signing of an agreement to purchase the 49% stake of Saudi An'am Trading Company in Al-Ra'ie National Livestock Company, raising its ownership after completing the transaction to 100%, with the deal remaining subject to necessary regulatory and contractual approvals.

The decline in profits came despite the company recording a non-recurring gain of 32.8 million riyals from the reversal of impairment losses related to old receivables that were collected during the quarter, in addition to a rise in other revenues by about 9.2 million riyals, supported by dividends and scrap sales.