Savola Edible Oils (SEO) Company has consolidated its hold in many of the markets where it is present while its subsidiaries including the newer ones are making good progress in capturing a bigger share of the business in their respective regions, the Savola Group says.

The Savola Edible Oils Company, owned 90 per cent by the group, posted a combined turnover of SR2.3 billion ($613 million) in 2004, up 82 per cent over 2003. The company raised edible oils production and reported sales in volume of 752,742 tonnes compared with 387,907 tonnes in 2003. “The growth enabled the Savola Group to achieve its 555 targets one full year ahead of its five-year plan,” SEO said.
The 555 targets aimed at achieving SR5 billion in sales and SR 500 million in net profits by 2005, which the group accomplished in 2004 by recording SR5.6 billion in sales and SR502 million in net profits.
The increase in the Savola Edible Oils turnover was largely due to acquisitions of controlling stakes in companies in Iran and Kazakhstan plus new operations in Morocco along with strong organic growth in existing businesses.
In the GCC, SEO saw revenues growing to SR852 million compared with SR737 million in 2003. “Despite fluctuations in raw materials costs, competition from cheaper imported brands and increased pressure from local manufacturers, the company managed to maintain its overall leadership with nearly 70 per cent of the market share,” a company report said.
It added that the flagship brands of Afia and Al-Arabi maintained their dominant market positions and their packaging formats had now become industry standards.
According to SEO, its new brand Afia Khairat was well received by the market while O’lite, a premium sunflower oil brand launched in 2003 continued to gain market share in the sunflower category, reaching 21 per cent from 12 per cent in 2003.
The company also claims that its Iranian subsidiary, Savola Behshahr Iran, held a 34 per cent market share. The subsidiary operates two edible oil mills, namely Beshahr Industrial Company (BIC) and Margarine Manufacturing Company (MMC) with Ladan and Aftab as their leading consumer brands.
The deal to acquire SBC was finalised in July 2004 and since that time the operations of BIC and MMC are being reorganised and restructured to conform to Savola standards, Savola Edible Oils Company said. BIC and MMC generated sales revenues of SR667.6 million on a sales volume of 278,000 tonnes. “The profitability of these operations was adversely affected by extraordinary restructuring charges and a price war started by local manufacturers who felt threatened by Savola’s entry into the Iranian market,” Savola said, adding it expected the price war to subside and both parties to return to normal levels of profitability.
 Only nine months of operating results were consolidated as SBC follows a different accounting calendar. Savola Edible Oils owns 49 per cent of SBC with management control. Behshahr Industrial Development Company holds the rest of the stake.
Savola’s Egyptian subsidiary Savola Sime Egypt (SSE) continues to face difficult conditions in the Egyptian market because of unstable raw materials prices coupled by inability to increase consumer prices because of the high devaluation of the Egyptian pound and low purchasing power. “Despite all these obstacles, SSE managed to maintain its market share and even entered new market segments,” Savola said.
“The overall market share of SSE reached 26.3 per cent in 2004 compared with 25 per cent in 2003, while delivering a reasonable level of profitability, despite the tough market conditions,” it said. SSE is owned 50 per cent by the Savola Group and its subsidiary Savola Edible Oils Company.
The Egyptian subsidiary successfully launched the Hanady brand to create a new frying oil segment in the local market. The brands Golden Sun and the Rawaby mini pack received widespread consumer acceptance, thus helping the company maintain its market share in both ghee and oils categories. “Stronger SSE marketing efforts for premium corn oil are paying off for the Afia brand, and it is likely that soon it will become the market leader in that premium segment,” said the Savola report.
Savola Edible Oils’ Jordanian subsidiary Afia International Company, formerly known as Savola Jordan, has continued breaking records year on year, says Savola. The company’s sales advanced from SR129.8 million in 2003 to an impressive SR293.9 million in 2004, mainly due to sales to Iraq.  During 2004, contracts under a UN food programme exceeded 81,000 tonnes.
“Afia International Company-Jordan, despite its lean structure, managed to maintain its leadership position in Jordan and also became a market leader of the premium corn oil segment in Lebanon and Syria,” Savola observed. “The Afia brand continued to enjoy a 41 per cent market share in Jordan, 28 per cent in Lebanon and 43 per cent in neighbouring Syria.
Savola Morocco Company (SMC), owned 51 per cent by Savola Edible Oils and 49 per cent by a local investor, is a greenfield launch with an annual production capacity of 50,000 tonnes. Savola said the company faced a costly price war when commercial operations began but that the morale of the whole organisation remained strongly upbeat and serious efforts were made to overcome the challenges.
“Significantly, the Afia and Hala brands increased heir market share with consumers appreciating the brand’s innovative packaging and consistent high quality,” it said. “Overall market share reached 4 per cent,” the company said, adding the subsidiary remained confident that consumer preference would grow.
Savola Kazakhstan is 90 per cent owned by Savola Edible Oils and 10 per cent owned by a local company. The subsidiary began as a takeover of an existing edible oils factory in the Aktobe region of the country. The acquisition was completed in October 2004, following board approval in November 2003. The existing plant is capable of refining 22,500 tonnes of soft oil with its own crushing facilities and plans are being developed to expand production capacities.
Savola Sudan’s capital was raised in 2004 to $8 million from $5.5 million. The increase became necessary when local financial institutions failed to grant long-term loans to finance the plant. Operations began in the first half of 2005.
The edible oils division is constantly exploring investment opportunities in the Middle East, Asia and Africa to become a dominant player in manufacturing and the sale of edible oils and fats.
“Additional opportunities have been identified either for acquisition or to build new facilities in new countries and these have been initially approved by the board of directors,” Savola said.
Earlier this year, the Savola board headed by the chairman, Adel M Fakeih, welcomed Dr Abdulraouf M Mannaa as the new CEO of the group.