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A'Saffa Considers Diversification Options

by 5m Editor
30 December 2010, at 9:19a.m.

OMAN - Poultry meat company, A'Saffa Foods, is reviewing options for future investment, which include a further processing facility and table egg production.

The A'Saffa Foods board has favoured for a review of the two expansion projects – value-added meat processing unit and a table eggs venture – before making an investment decision, reports Times of Oman.

The board of directors of A'Saffa Foods, the biggest poultry meat producer in the Sultanate, has recommended for a review of two expansion projects before making an investment decision.

These two projects are a value-added meat processing unit and a table eggs venture, which were proposed to bring down the cost of various products and enhance revenue streams. A company official earlier said that A'Saffa was considering two expansion plans – one to produce 90 million table eggs per annum and another to make processed meat products like burgers and nuggets, which are now out-sourced from neighbouring United Arab Emirates UAE).

National Bank of Oman (NBO), in a recent research report on A'Saffa, said that its growth-oriented strategy to branch out into other complementary products began in 2009 by adding value-added packaged food products. The packaged products are currently out-sourced from the UAE and its contribution to the company's bottom line is less than 10 per cent.

"There is an opportunity to reduce costs by building facilities to produce packaged meats such as franks and hamburgers and other agricultural products," said the NBO report. A'Saffa, which has its plant in Thumrait in Dhofar region, currently produces eggs for use in the hatchery to produce chicks. "However, it currently utilises only 50 per cent of its egg production capacity," added the report.

The NBO report added that A'Saffa operates 54 parent farms and 81 broiler farms and produces 17,000 metric tonnes of poultry meat per annum, making it the largest fully integrated poultry complex in the country with a 17 per cent market share.

It continues: "Its competitive edge lies in its well established brand image based on high quality and health standards. A'Saffa's appeal in the market stems from the fact that its broiler chicks are fed organic materials. In addition, by having full facilities under one roof, A'Saffa is better able to control operating costs."

Around 30 per cent of A'Saffa's current production is exported to most of the Gulf Cooperation Council states. It recently announced its entry into Bahrain and Yemen and has plans to penetrate the Kuwaiti market.

A'Saffa Foods posted a 12.6 per cent growth in net profit at 2.44 million rial (OMR) for the first nine months of 2010, over the same period last year. Likewise, the company's sales revenue soared by 19.27 per cent to OMR13.99 million. The company's earnings per share stood slightly higher at 24 baisas by end-September 2010, as against 22 baisas for the same period last year.