Record profits: Baladna to double down on new product innovation and international projects after 137% growth

By Pearly Neo

- Last updated on GMT

Baladna has announced plans to double down on its new product innovation and international market expansion strategy. ©Baladna
Baladna has announced plans to double down on its new product innovation and international market expansion strategy. ©Baladna
Qatari dairy firm Baladna has announced plans to double down on its new product innovation and international market expansion strategy, particularly in Algeria, after seeing a record growth in net profits over the first six months of 2024.

Baladna recently announced its H1FY2024 financial results, reporting a 15% year-on-year increase in revenue to QR595mn (US$164.1mn) and a 137% year-on-year growth in net profits to QR100mn (US$27.6mn).

“This is the first time in Baladna’s history that we have reached the milestone of QR100mn in net profit within the first six months of a financial year,”​ Baladna CFO Saifullah Khan told the floor at the firm’s investors call announcing the financial results.

“The revenue growth was primarily driven by increased sales volume across all channels and product categories, favorable market conditions, and continued gains in market share; [wehreas] the significant increase in net profit was primarily driven by [operational] efficiencies coupled with strategic and efficient cost control measures.

Khan did not make any mention of the impacts of price hikes on the profit margins in his initial presentation, but later revealed that this had contributed almost half of the record profits.

“The impact of price increases was between 40 to 45% - The rest came from volume increases,”​ he said.

“The year 2022 and 2023 saw all commodity prices go to an all-time high and there was a significant impact of inflation on our cost lines and the profitability of the company went terribly down.

“That was the case we built to transfer our cost impact to consumers, and we got approval from the government, and they allowed us to shift partially that cost impact to the consumers.

“Afterwards, we increased the prices for different product categories at different rates in July 2023, [varying from] category to category and product to product, but at a rough percentageof 10 to 12%.”

Despite this, the firm has maintained that it will focus on further boosting its portfolio via new product innovations in order to further expand market share in its key categories such as fresh milk, UHT milk and other categories with ‘substantial’ growth potential.

“In the first half of the year, we made notable advancements including our entry into the high protein milk market and successful expansion of the Greek Yogurt portfolio,”​ he said.

“Additionally, we have relaunched our juice line with a refreshed design and new flavors to enhance the consumer experience.

“Currently our market share in the fresh milk category has surpassed 95% and UHT has also exceeded the 90% mark – We are the market leaders in both of these categories as well as creams (62%),  laban (63.4%), yoghurt (48.6%) and labneh (40.1%).”

International growth

Baladna has also identified two major international markets as growth enablers, namely Algeria where it is launching a billion-dollar project and Egypt where it has an alliance with local dairy giant Juhayna.

“One of the areas of focus will be on strengthening our strategic alliance in Egypt wheer we hold a significant 15% stake in the largest dairy producer in Egypt, Juhayna Food Industries,”​ he said.

“We are also advancing a project in Algeria according to plan and groundbreaking activities are expected to commence in the next few months - The project size is huge, and it will be one of the largest integrated dairy projects in the world with a US$3.5bn investment.

“The capital structure for this project is that, 51% of the project value will be funded from local banks in Algeria and 49% is equity - Baladna's share in the equity is 51% and 49% is coming from the government of Algeria.

“The construction phase of the project is nine years, and the required CAPEX will be spent gradually. Regarding the return of the project, a significant return on investments from Baladna’s point of view is expected.”

The project will cover 117,000 hectares and comprise three hubs that have an arable farming operation, a dairy and beef farming operation, and a powdered milk manufacturing facility. It is expected to be the world’s largest integrated project for powdered milk production.

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