Jeddah, Saudi Arabia, June 13 - Saudi food company Halwani Brothers Co plans to spend up to 250 million riyals ($66.7 million) to double to 10 percent its annual sales growth from 2011, its top executive said on Saturday.
The firm will award next month the contracts for the first phase of the expansion which will include a date biscuit plant and a packaging unit that will start before the end of 2010, Chief Executive Saleh Hefni told Reuters.
The company, which raised 85.7 million riyals from an initial public offering about a year ago, has been posting an annual sales growth of 5 percent, he said.
"That is not acceptable to our management today".
The company's stock rose 307 percent since its listing.
The expansion, which will be completed in 2011, will be 50-percent funded by the state-owned Industrial Development Fund (SIDF), 25-percent through Islamic loans and 25 percent by Halwani, Hefni added.
Halwani is active mainly in Saudi Arabia and Egypt. Its products include Middle Eastern sweets, processed meat, jams and dairy products.
Its net profit in 2008 rose more than 80 percent to 61 million riyals -- inclusive of non-recurring profit from the sale of a land plot -- after it focused on most productive geographic areas and raised the prices of some products, Hefni said.
Profitability in 2009 will hinge on how quickly the Egyptian market will return to normal consumption levels after the H1N1 virus prompted consumers there to avoid buying red meat, he said.
Halwani's sales of processed meat in Egypt fell 33 percent last month, Hefni said, noting that the Egyptian market generates 60 percent of Halwani's overall operating profit.
"We are maintaining profitability ... The minute this hit us we tried to produce only three to four days a week just to make sure that we reduce the costs of operation," he said.
"If the business improves a great deal in Egypt ... We will maintain (in the second quarter) the same profitability as in the first quarter," he said.
Excluding a 23.4 million riyals gain from the sale of the land plot in Riyadh, Halwani's net profit in the first quarter rose 52.4 percent to 12.5 million riyals.