Oct. 17 (Bloomberg) -- Almarai Co., Saudi Arabia’s largest food producer by market value, may set up its first Islamic bond program by early 2012 as it seeks financing for expansion.
The riyal-denominated sukuk would be available only to the local market and would help finance an “ambitious capital expenditure development plan and working capital needs,” Chief Financial Officer Paul-Louis Gay said in an e-mailed response to questions today. The size of the program is “not clearly defined yet,” he said. The Riyadh-based company plans to set up the program by the end of this year or early next year.
Sukuk sales in the six-nation Gulf Cooperation Council, which includes Saudi Arabia and the United Arab Emirates, declined to $3.73 billion so far this year from $3.97 billion a year earlier. Saudi Aramco Total Refining & Petrochemical Co., a venture between Saudi Arabian Oil Co. and Total SA, sold 3.75 billion riyals ($1 billion) of Islamic bonds earlier this month.
Almarai will seek shareholders’ approval for the bond program at a meeting on Nov. 11, it said in a statement to the Saudi bourse yesterday.
The company’s third-quarter profit advanced to 429.7 million riyals from 424.5 million riyals a year earlier. Profit growth was restrained by production costs and “investments in production capacities and expansions to meet growing demand,” the company said. Capital expenditure reached 2.2 billion riyals in the first nine months, it said.
The shares have declined 23 percent this year compared with a 7.3 percent drop in the benchmark Tadawul All Share Index. The stock closed unchanged at 85.75 riyals yesterday.
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