Analysis: the growth is in food processing, not retail

The segment note is where the half is explained. Food Processing produced external revenues of 6,797,216 against 6,296,811 a year earlier and profit from continuing operations of 307,227 against 200,622. Retail produced external revenues of 5,899,020 against 5,849,404 and profit from continuing operations of 33,196 against 48,557. On revenue the two segments are of comparable size; on profit they are not, and the gap widened over the year.

Food Services narrowed its loss to 944 from 17,696 on lower external revenues of 501,054 against 541,543, and Frozen Food produced 35,833 against 29,892 on external revenues of 390,302 against 392,278. Neither is large enough to change the group picture. The Others and Eliminations line fell to 33,122 from 73,313, which removes part of the headline improvement.

Two mechanical points follow. First, group revenue growth of roughly half a billion riyals came almost entirely from Food Processing, whose segment revenue rose to 6,935,614 from 6,452,950 while its cost of revenues rose to 5,971,953 from 5,575,109. Second, Retail carries the group’s depreciation load: 400,156 against 376,912 a year earlier, on segment assets that fell to 7,736,753 from 8,635,759 while Food Processing assets rose to 12,017,604 from 11,165,723. A retail segment shrinking its asset base while its depreciation charge rises and its profit falls is the part of these accounts a careful reader would follow into the next period.

Geography reinforces the point without resolving it. Revenue came from Arabia, meaning the GCC and Levant, at 10.3 billion, Egypt at 2.9 billion and other locations at 0.4 billion, against 10 billion, 2.7 billion and 0.4 billion. Egypt grew, and the group also recorded negative foreign currency translation differences of 26,646 for the half against a positive 19,747 a year earlier. The statements do not attribute the translation movement to any specific currency.

The discontinued operations line deserves care. It contributed 43,647 to profit for the half against a loss of 18,765, a swing that accounts for a meaningful part of the year on year improvement in reported profit but says nothing about the continuing business. Measured on continuing operations alone, profit rose to 408,434 from 334,688 and earnings per share rose to 1.21 from 1.05, while the second quarter’s continuing earnings per share fell to 0.39 from 0.42. The half improved; the quarter, on the continuing measure, did not.

What the documents say

Savola Group Company (Tadawul: 2050) reported profit for the six months period ended June 30, 2026 of 452,081, against 315,923 a year earlier, on revenues from continuing operations of 13,587,592 against 13,080,036. All amounts are in thousands of Saudi riyals. The interim condensed consolidated financial statements were authorised for issue by the board on Safar 22, 1448H corresponding to August 5, 2026.

The profit and loss account

Gross profit was 2,625,472 against 2,568,481, on cost of revenues of 10,962,120 against 10,511,555. Selling and distribution expenses fell to 1,586,123 from 1,604,014 and administrative expenses fell to 394,059 from 411,835. The share of results in equity-accounted investees, net of zakat and tax, rose to 34,241 from 18,394. Results from operating activities were 696,037 against 600,492.

Below the operating line, finance income was 82,393 against 83,106 and finance cost was 252,238 against 251,330, leaving profit before zakat and income tax of 526,192 against 432,268. Income tax expense was 88,520 against 83,094 and zakat expense was 29,238 against 14,486. Profit from continuing operations was 408,434 against 334,688. Discontinued operations contributed 43,647 in the current period against a loss of 18,765.

Profit attributable to owners of the company was 401,061 against 294,858, with non-controlling interests taking 51,020 against 21,065. Basic and diluted earnings per share from continuing operations were 1.21 against 1.05. Other comprehensive income was negative in the current period, at 72,747 against 27,272, driven by foreign currency translation differences of 26,646 and cash flow hedges of 52,414, so total comprehensive income was 379,334 against 288,651.

For the second quarter alone, revenues were 6,295,437 against 5,799,005 and profit for the period was 136,864 against 112,883. Quarterly profit from continuing operations was 136,864 against 132,407, and quarterly earnings per share from continuing operations were 0.39 against 0.42.

Total assets were 20,394,625 against 20,480,053 at the prior year end, and total equity was 6,323,459 against 6,466,066. During the period shareholders at the ordinary general assembly approved dividends for the year ended December 31, 2025 of 510 million, representing 1.7 per share. Dividends paid in the cash flow statement were 505,227, with a further 19,184 paid to non-controlling interests.

The related party acquisition and what has to happen next

Subsequent to June 30, 2026 the group acquired a 100% equity interest in Al Mehbaj Al Shamiya for Trading LLC, a food processing company and a related party of the group, for total consideration of 11.4 million. Of that, 5.4 million was paid after the reporting date following completion of agreed post-completion adjustments and legal formalities including regulatory approvals, and 6.0 million is deferred consideration payable on the first anniversary of the completion date.

The transaction remains subject to ratification by shareholders at the next general assembly under the applicable requirements governing related party transactions. The Corporate Governance Regulations issued by the Capital Market Authority place that class of transaction under Article 40, and require the audit committee to review contracts and proposed related party transactions and give its recommendations to the board. The board is separately required to have a written conflicts of interest policy under Article 41, and the annual board report must describe any transaction between the company and any related party.

At 11.4 million against group revenues above 13 billion for the half, the consideration is immaterial to the accounts. The disclosure matters for a different reason: it is a purchase from a related party that has already completed and is awaiting shareholder ratification, which is the sequence the governance rules are written to make visible.

Reporting and listing

Interim statements are disclosed under Article 66 of the Rules on the Offer of Securities and Continuing Obligations, which requires preparation under the standards adopted by SOCPA and public disclosure within a period not exceeding 30 days of the end of the period covered. Savola’s statements cover a period ended June 30, 2026 and were authorised for issue on August 5, 2026.

The group’s share capital of 3 billion consists of 300 million fully paid shares of 10 each, unchanged from December 31, 2025, following the capital reduction and in-kind distribution of the group’s entire stake in Almarai completed during 2024. As of June 30, 2026 the company still holds certain Almarai shares on behalf of certificate shareholders in a fiduciary capacity while transfer formalities proceed. The shares trade on the Tadawul Exchange under symbol 2050 with ISIN SA0007879162, and have been listed since 1 December 1991. The foreign ownership limit is 49%, against actual foreign ownership of 7.83% at the end of 2024.