Saudi dairy firm Almarai says costs to rise by 500 mln riyals in 2016

DUBAI: Saudi Arabian dairy firm Almarai on Sunday said utility price increases and new crop-growing restrictions will increase its costs by 500 million riyals (Dh489 million; $133.2 million) in 2016.

The government in December announced reforms to energy subsidies as part of the kingdom’s annual budget, prompting many firms to announce the likely impact of these changes on their costs.

Almarai said the increase in fuel, electricity and water tariffs will cause its costs to rise by 200 million riyals in 2016, plus a further 100 million riyals in indirect costs this year as its local suppliers raise their prices because of the utility price hikes.

Almarai’s costs will increase by a further 200 million riyals in 2016 after the government in December announced plans to halt growing green fodder in the kingdom. This amount will rise each year until the company imports all the green fodder it needs by 2019, it added.

— Reuters