JEDDAH, SAUDI ARABIA — Growth in its flour segment contributed to a 4.5% increase in revenue for leading Saudi Arabia milling company First Mills in the first nine months of the year but net profit dropped 17.5% due to financing costs.

The company reported net profit of SAR 162.7 million ($43.4 million) for the first nine months and SAR 54 million ($14.4 million) for the third quarter ended Sept. 30, a decrease of 14.9%. The year-over-year decline was driven by the application of financing costs related to the merger with the parent company Al Raha Al Safi. Excluding the impact of interest cost, the like-for-like profit is in line with the same period last year.

"First Mills delivered a solid set of results for the first nine months of 2023G, in spite of the challenging market environment,” said Abdullah Ababtain, chief executive officer. “Our core business is diversified and robust, and we are actively improving efficiencies to expand margins. Our downstream businesses that we continue developing will start boosting in the last quarter of 2023G such as the launch of our PESA mill and mixing plant, with more to come in 2024G from the commissioning of our durum mill and mill-C upgrade. Our stable revenues, double digit margins, and clear growth path tell me that First Mills is on the right track towards long term value creation for our shareholders and all related stakeholders.”

Revenue for the nine months was SAR 718 million ($191.4 million) due to the 8% growth in the flour segment, reflecting the company’s success in acquiring new customers and increasing its geographic coverage.

Third quarter revenue increased 4.3% driven by net revenue growth in flour by 10% and feed by 16%.

First Mills’ third-quarter capacity utilization was 97.2%, increasing by 7% compared to the same period of last year.

The company has identified growing demand for its products in new geographical areas, and as such has increased its selling and distribution costs to accommodate this increased demand. However, operating expenses maintained the same levels as previous periods as a result of re-adjusting and managing general, administrative and other expenses.

First Mills produces flour and bran from its Jeddah, Qassim, Tabuk, and Al Ahsa plants, and produces feed from its Jeddah and Qassim plants.

The company said it expects promising upside from two significant avenues. In its core business, First Mills said it will optimize cost and production dynamics to achieve economies of scale. It is also expanding into new downstream business segments that should start contributing to yield growth and increasing the company’s market share.

The company is working on four projects including: a PESA mill, a pre-mix plant, a durum mill that will be commissioned in the fourth quarter and a 250-tpd expansion of its Jeddah mill that will also be commissioned in the fourth quarter.