The Saudi Dairy and Foodstuff Company (SADAFCO)- an associate of UIC with 40.13% - is one of the most important companies in UIC's investment portfolio. SADAFCO was established in 1976 and started production in 1977 in Jeddah, Saudi Arabia.
SADAFCO is a pioneer in the dairy and foodstuff industry, especially in long-life milk, and is a leader in the regional market. The products that the company introduced in 2009 were well-received by consumers, and in 2010 the company introduced a number of other products such as butter and fortified children's milk. This came following the adoption of its promise to consumers to "develop, produce and market a series of nutritious products to consumers of all ages, and to create a greater added value in the interest of its shareholders and through the work of its team" pledging to make "Saudia" the favorite trademark. SADAFCO has earned the trust of consumers of different ages and nationalities through long history, "Saudia" trademark and competitive prices.
During the year, the management monitored the performance of its operating investments, both in Kuwait and abroad, with the aim of developing these investments on one side and to mitigate the challenges that may hinder the progress of others in view of current circumstances. These efforts have paid off where significant improvements was achieved in a number of these investments, as operational capacity have increased recording positive gains in the financial statements of UIC, as seen in the Group performance. As for our other contributions, work is in progress to determine the best means to bring matters back on track.
Throughout 2010, SADAFCO encountered many activities and positive changes, starting with the feasibility study to unify the infrastructure of the company's production lines and related activities under one roof. The feasibility study comprised the evaluation of several locations in the Kingdom, including King Abdullah Economic City, out of the company's desire to increase production efficiency levels and the capacity to accommodate future consumer demands.
Production operations during the year was focused on enhancing the performance of plants and production lines through the following ; improving customer service and providing products, enhancing quality value and the performance of equipment and employees. The year also witnessed the revamping of company's fleet, which effectively contributed to delivering products to distribution points which consequently increased storage capacity in the Kingdom of Saudi Arabia. The logistics in the company successfully managed the supplies by providing raw materials to accommodate the production capacity for the year, which in turn met the consumer demand for products.
In line with SADAFCO's corporate culture that manpower is the main element in the successful development of operations, many new employees were hired by the company to support its growth and development plans. The company maintains the percentage of Saudi employees at around 30%, which indicates continuous growth and will positively reflect on the financial results in the coming years.
SADAFCO's financial results improved both in sales and net profit in the first nine months ended December 31,2010. Net sales increased 8% to reach SR 840 million, compared to SR 775 million for the same period in 2009. Operating profit also increased 8% to SR 94.7 million compared to SR 87.5 million for the same period in 2009.
Operating profit also increased 8% to SR 94.7 million compared to SR 87.5 million for the same period in 2009.
This growth is attributed to the effective implementation of product promotion projects, encouraging customers to minimize the impact of price increase, which in turn led to a drop in quantity. This is besides the introduction of new products.
Revenues from investments increased 33% to SR 11.1million, including SR 10 million from the company's investment portfolios during the stated period. Net profit in the first nine months increase 14% to reach SR 97 million, compared to SR 85 million for the same period in 2009.
SADAFCO's complete stake in the Saudi New Zealand Dairy Products Co. Ltd. was sold for SR 135.2 million equal KD 10.3 million, realizing total profit of SR 109 million equal KD 8.3 million.