Saudi dairy and foodstuff firm Sadafco has posted a net loss of SR25 million ($6.7 million) in the financial year up to March-end 2006 mainly due to a boycott of Danish products.

“Sadafco was unfairly implicated in the boycott of Danish products,” the company said in a statement reported by Reuters.
CEO Ton Vanelst said old links between the company and a Danish partner, which used to hold a five per cent capital stake, could explain why Sadafco products were hit by the boycott.
“This relationship ended in 1987. But it must have stayed in the minds of the people and some publications said the links still existed. It has affected our results in terms of sales and profit,” he told the news agency.
“But there was also another factor which did not help, it was a rise in prices of dairy base, namely milk powder.”
At the height of the crisis, the firm had published adverts in local newspapers dissociating its brands from Danish companies.
Sadafco’s sales over the April 2005-March 2006 period reached SR825 million. Vanelst was unable to say if his company expected to recover this year.  “Many things can happen in a year, as we have noticed last year, so it’s too early to say. But from a revenue perspective we hope we will be coming to a normal track in the course of the year,” he said.
In other dairy developments in Saudi Arabia, Almarai said it planned to invest SR4 billion in the coming five years, up 60 per cent from the previous five.
The firm said in a statement posted on the bourse website and reported by Reuters that it was studying several investment opportunities and the launch of new products.
It said the investment aimed mainly at consolidating the firm’s “leadership in the Arab Gulf region.”
“The strong financial situation of the company and expected cash inflows from the business development throughout this (five-year) plan will allow the company to cover its financing needs and this reflects its positive future,” the statement said.
The statement said the company had invested SR2.5 billion in the 2001-2005 period.
Almarai said earlier this year it expected to arrange financing, probably through a rights issue, to fund a five-year expansion it estimated then at SR593 million. The company announced a first-quarter net profit of SR90.6 million, up 16.2 per cent from the same period in 2005.