First Milling Company, a market-leading Saudi milling firm, has seen its FY 2023 net profit rise 1.25% to SR220.2 million ($58.7 million) and register net profit margin of 22.8% in FY 2023 and 23.3% in Q4 2023, driven by strong growth in flour sales.

Excluding the impact of interest costs, the like-for-like profit would result in a 17.6% growth compared to the same period of last year, driven by the 5.5% revenue increase and 11.3% decline in operating expenses (Opex).

Likewise, Q4 2023 net profit grew by 183.4% to reach SR57.5 million. Excluding one-off costs such as depreciation correction, provisions for legal cases and IPO costs, Q4 2023 net profits would increase by 43% YoY.

Abdullah Ababtain, Chief Executive Officer of First Mills, said: “2023 was a year in which First Mills lived up to its pioneering name, becoming the first milling company to list on the Saudi Exchange and subsequently reporting its first complete fiscal year as a listed company. We delivered a robust financial performance, showcasing our ability to enhance both top and bottom-line growth, underpinned by our extensive production capabilities, high utilisation rates, and cost-efficiency measures.

“Guided by a clear roadmap, we are successfully executing our strategy of diversifying our product portfolio into high margin products, expanding our geographical footprint, and reaching a broader customer base. Our downstream operations grew in 2023, exemplified by the launch of our PESA Mill and Mixing Plant and the commissioning of our Durum Mill and Jeddah Mill-C Upgrade, which we expect to further solidify our market leadership in Saudi Arabia.

“Looking to the year ahead, we remain committed to our strategic roadmap and delivering long term sustainable value for our shareholders.”

First Mills achieved a 5.5% year-on-year (YoY) revenue growth in FY 2023, generating SR964.3 million. This topline growth is attributed to its largest product segment, Flour, growing by 9.0% compared to last year despite the shutdown of Mill C for capacity upgrade, supported by 5.9% growth in Bran revenue driven by the success of the company’s strategy in building and further diversifying its customer base, in addition to increasing its geographic coverage across Saudi Arabia.

Importantly, for the first time, the company registered sales in its newly launched Premix category, which is expected to achieve double-digit growth in its nascency as the Company continues to expand its B2C platform. Aloula Retail Brand witnessed 37% growth in small-pack sales YoY, reflecting First Mills’ ability to capture growth in the highly competitive retail market segment.

During Q4 2023, revenue grew 8.8% YoY, driven by the increase across all categories but mainly through the growth of Flour by 11.8% and Feed by 6.0%. Bran grew by 2.4% YoY as a result of the company’s decision to prioritise intake towards Feed production to meet the upsurge in demand for this larger product category.

The company closed 2023 with an operating profit of SR287.0 million, a 12.3% increase YoY, underscoring the solid standing of First Mills’ core business and its ability to manage its operational costs effectively.

For Q4 2023, operating profit grew 99.0% to SR73.9 million due to both strong organic growth in the business and one-off costs related to the IPO, depreciation correction, and provisions set aside for legal case. Excluding the impact of one-off costs, the like-for-like operating profit would grow by approximately 30%, generating SR17 million compared to the previous year.

First Mills is successfully executing its strategy of expanding further downstream into B2C business segments. During FY 2023, First Mills launched the PESA Mill in Q3 2023 and began producing the kingdom’s first locally produced Chakki Atta Flour. Similarly, the kingdom’s first Durum Mill, was commissioned in Q4 2023, while the Pre-Mix plant began production and sales.

These strategic projects enable First Mills to optimise its cost and production dynamics to achieve economies of scale as it expands its geographic reach, covering all major regions of the Kingdom. Reflecting this expansion, the Company recorded revenue growth across all its geographic segments in FY 2023, with Alhasa leading the growth by 12.3% followed by Jeddah plant achieving strong YoY growth of 7.2%, Tabuk at 2.6% and Qassim at 2%.

In FY 2023, the company registered an installed wheat milling capacity utilisation of 88%, increasing by 3% compared to the same period last year.

Leveraging its unique working capital model, First Mills generated a robust Free Cash Flow (FCF) of SR 222.4 million with an FCF Conversion Rate of 66.3%, underscoring the company’s commitment to efficient capital allocation and cash flow optimisation. Moreover, the strategic increase in CAPEX to SR119.4 million in FY 2023 fuelled First Mills’ downstream expansion aspirations and provided a solid foundation to propel both growth and expansion opportunities.