Riyadh, April 10 - Saudi Arabia's Almarai Co., the Gulf's largest dairy company by market value, said on Tuesday its first-quarter net profit surged 35.7 percent after its acquisition of two bakeries.
Almarai's net profit in the three months up to March 31 reached 122.9 million riyals ($32.8 million) against 90.6 million riyals in the year-earlier period, it said in a statement posted on the bourse's Web site.
Almarai said this year's first-quarter results included those of Western Bakeries and International Bakery Services Co., two companies it agreed to acquire in November of last year.
It did not provide more details of the scope of their contribution to its results. Almarai paid in stock worth 709 million riyals to buy the two companies.
The growth in first-quarter net profit was the strongest since at least 2004. It was also close to the average 36.9 percent analysts had forecast in a Reuters poll last month.
Bakheet Financial Advisors' forecast was the nearest of three brokerage and research firms.
But Hesham Abou-Jamee, Bakheet's head of asset management, said their 39.1 percent profit growth forecast did not include the two bakeries. Almarai has not disclosed any details on the two bakeries' activity and earnings.
"The profit growth started in the second quarter of 2006 when we saw a considerable rise in revenues due to new marketing strategy, higher production and reduced costs," Abou-Jamee said.
"But I don't see the company keeping the same growth momentum by the end of this year," he said, predicting a net profit of 520 million riyals for 2007, up 12 percent from the 465 million riyals it made in 2006.
Almarai's turnover rose 29.8 percent to 807 million riyals and operating profit rose 35.3 percent to 144.6 million riyals from the first quarter of 2006.
Almarai is expected to invest heavily over the coming few years after it joined a consortium led by Kuwait's Mobile Telecommunications Co. that looks set to win Saudi Arabia's third mobile phone licence with a $6.1 billion offer.
"It will hurt (Almarai) in the beginning before it sees benefits from the licence investment boost to its earnings after a few years," Abou-Jamee added.