Saudi Arabia food and agriculture sector on the rise - IFN

Saudi Arabia food and agriculture sector on the rise

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SAUDI ARABIA: According to a recent research report released by NCB Capital (NCBC), Saudi Arabia’s food and agriculture sector will maintain its positive outlook. This could pave the way for Halal food financing to flourish in the kingdom. The asset manager’s optimism is attributed to the strong macroeconomic environment that supports the sector outlook, together with heavyweights, Almarai and Savola seeking to strengthen their dominance though capacity increases. The global Halal industry is estimated to be worth more than US$2 trillion. The lion’s share of the market is commanded by the Islamic finance industry at an estimated US$1 trillion with the food sector valued at over US$650 billion. Both Almarai and Savola have issued Sukuk this year worth SAR1.7 billion (US$453.22 million) and US$400 million, respectively. Farouk Miah, the head of equity research at NCBC, expounded that Almarai’s performance is set to improve in 2014, with the continued fall in soft commodity prices and better performance in its poultry business being the drivers for the dairy producer. As for Savola, Farouk expects that margin expansions and continued benefits from non-core investments would lead to a compounded annual growth rate income accretion of 17% between 2013 and 2018. An international trade food and beverage exhibition held in Saudi Arabia has revealed that the kingdom’s food industry is in the midst of a boom and is forecast to grow significantly over the next five years. The rise is expected to sustain the country’s demand and meet its international export potential. Several prominent food and beverage companies have expressed their intentions to gain a better foothold in the industry to tap the kingdom’s potential.