A'saffa Foods in major expansion spree

05/02/2012 08:06 AST

A'saffa Foods, in its bid to become a major food producer in the region, is setting out on major expansion plans. The company is increasing its poultry production by about 24 per cent with a capital expenditure of RO 4 million. The expanded facility is expected to begin commercial production by the middle of the first quarter of this year.

A meat processing plant is also planned to be set up at Rusayl at a cost of RO 4 million, which is expected to commence production during the third quarter of this year. At the same time the company has completed a feasibility study on the proposed table egg project and is waiting for approval from the authorities. The total expenditure for this project is estimated to be around RO 3.5 million.

"This project is planned in line with the report of the Afro Asian Rural Development Organisation that the self sufficiency ratio of eggs in Oman is 52 per cent. This means that there is enough room to grow in this segment", according to a report by the Gulf Baader Capital Markets (GBCM) on the staple sector growth.

The company is also mulling an investment opportunity with Arab Authority for Agricultural Investment and Development to establish a breeder project in the Sultanate to supply hatching eggs to other poultry farms in Oman, GCC countries and others.

Meanwhile, the leading food producer in the Sultanate, witnessed a moderate growth in its revenue by 13.9 per cent year on year to RO 21.294 million in 2011.

"Despite a strong competition from the regional as well as foreign players the company has been able to snatch a decent market share in the domestic market. This can be attributed to the company which markets its products with the local flavour and an effective branding strategy", according to analyst at GBCM.

For the last quarter, the company reported a revenue of RO 5.350 million a decrease of 4.6 per cent on quarter to quarter and an increase of 13 per cent on year on year basis.

The total expenses increased by 13.1 per cent on the back of increasing raw material prices such as animal feed which is being influenced by the volatile international commodity prices. The cost of sales of the company witnessed a rise during the last fiscal along with the increase in the administration and selling expenses.

The net earnings stood at RO 3.854 million registering an increase of 19.8 per cent, while net margins improved by 90 bps to 18.1 per cent.

Oman Daily Observer