Food and agricultural stocks led Saudi shares up in after dairy firm Almarai recorded strong third-quarter earnings. The benchmark Tadawul All-Share Index (TASI) closed up 0.89 percent at 6,370.74 points on Saturday. The agricultural and food and industries index was making the day's strongest gains per sector, rising 1.29 percent. Almarai gained two percent after announcing a 23.7 percent rise in third-quarter profit. Shares in Saudi Fertilisers Co (Safco) are down 3.59 percent after the firm said its net profit during the third quarter fell nearly 75 percent compared to last year. The heavyweight banking sector index was down 0.18 percent while the petrochemical index was up 0.2 percent as Safco's decline is offset by 0.62 percent gains in its parent company Saudi Basic Industries Corp. (Reuters) Almarai Co, the Gulf's largest dairy company by market value, posted a 23.7 percent rise in third-quarter net profit but sales slowed down. Third-quarter net profit was SR363.4 million ($96.90 million) compared with SR293.7 million in the same period last year, the firm said in a statement on the bourse website. “These are good numbers,” said Laurent-Patrick Gally of Shuaa Capital. The Dubai-based firm had expected Almarai to post a 22.6 percent rise in third-quarter earnings. Almarai said operating profit rose 26 percent to SR413.9 million. Earnings per share stood at SR7.78 at the end of September, up from SR6.34 a year earlier. Sales growth during the third quarter stood at 11.4 percent, down from 16 percent during the second quarter. Savola Group holds a 27.9 percent stake in Almarai. Almarai shares gained 25.5 percent this year which is below both the 31.5 percent year-to-date rise of the all-share. TASI index and the 29.2 percent rise in the agricultural and food industries index. However, Saudi Arabian Fertilisers Co (Safco) said on Saturday that lower global prices were behind an almost 75 percent drop in its net profit during the third quarter, sending its shares down by as much as 4 percent. Safco said it made SR464 million ($123.7 million) in the three months to Sept. 30, compared with a SR1.83 billion record net profit it made a year earlier. “The decline during the third quarter compared to both the same period of 2008 and the second quarter of 2009 is due to a decrease in global prices,” Safco said in a statement posted on the bourse website. Saudi Basic Industries Corp (SABIC) holds a 42.9 percent stake in Safco. “For four quarters now Safco's net income has been down sequentially,” Laurent-Patrick Gally of Dubai-based Shuaa Capital said, adding that the stock was losing its appeal because of earnings decline. “These are not good numbers for investors”. Shuaa's third-quarter earnings forecast were in line with Safco's earnings. “Our forecasts assumed a 3 percent decline in fertiliser sales volume, a 64 percent in urea prices and 70 percent for ammonia,” Gally said. Safco said operating profit fell 77 percent during the third quarter to SR432 million. The annual decline in Safco's net profit stood at 60 percent in the second quarter and 27.4 percent in the first quarter. “We need to see next year prices of urea above $300 per tonne and ammonia above $250 per tonne to give a 10 to 15 percent rise in Safco's top line. Every dollar in Safco's topline goes almost fully to its bottom line,” Gally said. “Ammonia and urea prices during the third quarter were relatively flat compared to the second quarter,” he added. Saudi Fransi profit down Banque Saudi Fransi (BSF), one of Saudi Arabia's five biggest lenders by market value, on Saturday posted a 1.9 percent fall in third-quarter net profit on lower fees from deposit management and its local brokerage. Saudi Fransi made SR714 million ($190.4 million) in the three months to Sept.30 compared to SR728.6 million a year earlier, it said in a statement posted on the bourse's website. “The decline is due to the important decrease in management fees despite an increase in deposits and also to the decrease in trading operations on local shares,” it said. - Reuters/but the Indian monsoon season was not as rainy as usual which lessened demand,” Gally added. After it announced its earnings, Safco's stock fell to as low as SR120.25 from a previous close of SR125.25. Before Saturday's session, Safco shares gained 39.6 percent since the start of 2009, which is above the year-to-date performane of the all share.TASI index, but below the 63.2 percent rise in the petrochemical industry's index . “Valuation appears to us quite full ... we advise investors holding Safco shares to take some money out of the table at this stage. For those who don't already own the name, we recommend to wait for better entry points,” Gally said.
