Q2 2026 Oman Flour Mills Co SAOG Earnings Call
Speaker #1: As a consequence on both price, the price is expected to also grow compared to last year and even compared to the first half of this year, in response to what we just mentioned.
Haitham bin Mohamed Ali Al-Fannah: A consequence on both the price. The price is expected also to grow, compared to last year and compared even to the H1 of this year, in response to what we just mentioned. More cash will go into building up this inventory. That's this in summary, the results as well as the outlook. We'll open the floor for Q&A.
Haitham Al Fannah: A consequence on both the price. The price is expected also to grow, compared to last year and compared even to the H1 of this year, in response to what we just mentioned. More cash will go into building up this inventory. That's this in summary, the results as well as the outlook. We'll open the floor for Q&A.
Speaker #1: And, of course, the cash — I mean, more cash will go into building up this inventory. Yeah. That says, in summary, I mean, the results as well as the outlook.
Speaker #1: We'll open the floor for Q&A.
Speaker #2: Yes, Mr. Abbas, please go ahead.
[Analyst]: Yes, Mr. Abbas. Please go ahead.
[Company Representative] (Oman Flour Mills): Yes, Mr. Abbas. Please go ahead.
Speaker #1: Year review.
Haitham bin Mohamed Ali Al-Fannah: Yes, please.
Haitham Al Fannah: Yes, please.
Speaker #2: Thank you. Thank you, Haitham, for the very brief, to-the-point, and of course, insightful presentation. A couple of questions. Of course, the most important thing is, of course, the feedstock, which is the inventory that you spoke about.
[Analyst]: Thank you. Thank you, Haitham, for the very brief, to the point, and insightful presentation. Couple of questions. The most important thing is the feedstock, which is the inventory that you spoke about. Two questions now. How will you store this extra inventory? Can you speak about the silos that you have, and what made you go from 130 to 260, and why not 300? Why not lesser? Just to understand how you guys are looking at it in terms of number of months inventory, and storage, and the pricing available at the same time. I want to link this to the end product prices as well. Oman's a regulated market, so you'll not be able to increase the prices, both on the feed mill and the flour mill side. But there is a subsidy mechanism, is what I understand.
Abbas Kanchwala: Thank you. Thank you, Haitham, for the very brief, to the point, and insightful presentation. Couple of questions. The most important thing is the feedstock, which is the inventory that you spoke about. Two questions now. How will you store this extra inventory? Can you speak about the silos that you have, and what made you go from 130 to 260, and why not 300? Why not lesser? Just to understand how you guys are looking at it in terms of number of months inventory, and storage, and the pricing available at the same time.
Speaker #2: Two questions. Now, how will you store this extra inventory? Can you speak about the silos that you have, and what made you go from 130 to 260, and why not 300?
Speaker #2: You know, why not less? Just to understand how you all are looking at it in terms of number of months' inventory, storage, and the pricing available at the same time.
Speaker #2: Of course, I want to link this to the end product prices as well. You know, Oman is a regulated market, so you will not be able to increase the prices.
Abbas Kanchwala: I want to link this to the end product prices as well. Oman's a regulated market, so you'll not be able to increase the prices, both on the feed mill and the flour mill side. But there is a subsidy mechanism, is what I understand.
Speaker #2: Both on the feed mill and the flour mill side. But there is a subsidy mechanism, is what I understand. So, how is the management sort of taking care of—you know, of course, one is the availability, the food security, which is probably the number one priority of this company. Second is, of course, the profitability; eventually, it's a listed company that has shareholders.
[Analyst]: How is the management taking care of course, one is the availability, is the food security, which is probably the number one priority of this company. Second is, of course, the profitability. Eventually, it is a listed company who has shareholders. Just to understand how you guys are looking at it and balancing all these three things together.
Abbas Kanchwala: How is the management taking care of course, one is the availability, is the food security, which is probably the number one priority of this company. Second is, of course, the profitability. Eventually, it is a listed company who has shareholders. Just to understand how you guys are looking at it and balancing all these three things together.
Speaker #2: Just to understand how you guys are looking at it, and balancing all these three things together.
Speaker #1: Right. So, we start first with the storage. Of course, I mean, you know that there is a limitation when it comes to storing such huge volumes of grains.
Haitham bin Mohamed Ali Al-Fannah: Right. We start first with the storage. Of course, you know that there is limitation when it comes to storing such huge volumes of grains. Now, yes, there are projects going on to expand the storage capacity. However, how did we manage the situation? We started basically utilizing Sohar site. Today, the silos in Sohar are almost fully occupied, so we shifted some of the inventory to Sohar site. We also managed to secure some open spaces in the port, to store these feed-related grains, as well as basically, trying to manage the cargoes. The lineups, which again, it used to be tough, now it is tough square because of the lineups that you are having in the region. This is how we are managing. How do we decide? First, of course, as you mentioned, the objective is to have zero interruption in terms of production.
Haitham Al Fannah: Right. We start first with the storage. Of course, you know that there is limitation when it comes to storing such huge volumes of grains. Now, yes, there are projects going on to expand the storage capacity. However, how did we manage the situation? We started basically utilizing Sohar site. Today, the silos in Sohar are almost fully occupied, so we shifted some of the inventory to Sohar site. We also managed to secure some open spaces in the port, to store these feed-related grains, as well as basically, trying to manage the cargoes.
Speaker #1: Now, yes, there are projects— I mean, going on to expand the storage capacity. However, how did we manage the situation? We started basically utilizing the Sahar site.
Speaker #1: Today, the silos in Sahar are almost fully occupied, so we shifted some of the inventory to the Sahar site. We also managed to secure some open spaces in the port to store these grain feed-related grains.
Speaker #1: As well as, basically, trying to manage the cargoes. I mean, the lineups, which is, again, it used to be tough. Now it is tough squared.
Haitham Al Fannah: The lineups, which again, it used to be tough, now it is tough square because of the lineups that you are having in the region. This is how we are managing. How do we decide? First, of course, as you mentioned, the objective is to have zero interruption in terms of production.
Speaker #1: I mean, because of the lineups that you are having in the region, this is how we are managing. Now, how do we decide?
Speaker #1: First, of course, as you mentioned, the objective is to have zero interruptions in terms of production. That is why we are building this stock.
Haitham bin Mohamed Ali Al-Fannah: That is why we are building this stock. We took some market opportunities. Some of these cargoes were actually afloat. So we managed to get good prices there compared to the market in certain deals or certain transactions. This is how we are managing. Going forward, again, as we mentioned, that we have the lineup. So yes, we do book, but there is a lineup. We basically try to plan the deliveries so that whenever we have enough space to accommodate, we call in the vessel. This is in summary, how we are managing the inventory and storage. In terms of price pressure, of course, as you mentioned, that the price, especially in the flour and feed, is regulated. We have a fallback mechanism, which is basically the subsidy for the wheat. Whenever the wheat prices goes beyond $300, the subsidy scheme kicks in.
Haitham Al Fannah: That is why we are building this stock. We took some market opportunities. Some of these cargoes were actually afloat. So we managed to get good prices there compared to the market in certain deals or certain transactions. This is how we are managing. Going forward, again, as we mentioned, that we have the lineup. So yes, we do book, but there is a lineup. We basically try to plan the deliveries so that whenever we have enough space to accommodate, we call in the vessel.
Speaker #1: We took some market opportunities. Some of these cargoes were actually afloat, so we managed to get good prices compared to the market in certain deals or certain transactions.
Speaker #1: So this is how we are managing. Now, going forward, again, as we mentioned, we have the lineup. So yes, we do book, but there is a lineup.
Speaker #1: These are—I mean, we basically try to plan the deliveries so that whenever we have enough space to accommodate, we call in the vessel.
Speaker #1: So this is, in summary, how we are managing the inventory and storage. Now, in terms of price pressure, of course, as you mentioned, the price, especially in the flour and feed, is regulated.
Haitham Al Fannah: This is in summary, how we are managing the inventory and storage. In terms of price pressure, of course, as you mentioned, that the price, especially in the flour and feed, is regulated. We have a fallback mechanism, which is basically the subsidy for the wheat. Whenever the wheat prices goes beyond $300, the subsidy scheme kicks in.
Speaker #1: I mean, we are— I mean, we have a fallback mechanism, which is basically the subsidy for the wheat. Whenever the wheat price goes beyond $300, the subsidy scheme kicks in.
Speaker #1: So that is for the flour. For the feed, now for the feed, there is no subsidy as such. However, I mean, we are shifting the— we are seeing a little bit of a shift in terms of the trade.
Haitham bin Mohamed Ali Al-Fannah: That is for the flour. For the feed, there is no subsidy as such. However, we are seeing a little bit of a shift in terms of the trade. A lot of people are buying raw materials compared to finished goods. That gives us a little bit flexibility to pass on this price increase to the customers. Our customers are major firms, I would say, in the feed business. There is a little bit of an opportunity to increase the price over there or to pass the price a little bit over there.
Haitham Al Fannah: That is for the flour. For the feed, there is no subsidy as such. However, we are seeing a little bit of a shift in terms of the trade. A lot of people are buying raw materials compared to finished goods. That gives us a little bit flexibility to pass on this price increase to the customers. Our customers are major firms, I would say, in the feed business. There is a little bit of an opportunity to increase the price over there or to pass the price a little bit over there.
Speaker #1: A lot of people are buying raw materials, yeah, compared to finished goods. So that gives us a little bit of flexibility to pass on this price increase to the customers.
Speaker #1: And so our customers are major farms—major farms, I would say—in the feed business. So there is a little bit of an opportunity to increase the price over there, or to pass the price a little bit over there.
Speaker #2: What's the average sort of wheat prices that you paid to secure this cargo? Some of it is on floating storage also, right? The way I understood it is some of this you're storing at ports in actual silos, and some of it is on floating storage.
[Analyst]: What is the average wheat prices that you paid to secure this cargo? Some of it is on floating storage also, right? The way I understood it is some of this you are storing at ports in actual silos, and some of it is on floating storage. If you have to break down in terms of average what you are paying, what have you paid on average to secure these cargoes of wheat?
Abbas Kanchwala: What is the average wheat prices that you paid to secure this cargo? Some of it is on floating storage also, right? The way I understood it is some of this you are storing at ports in actual silos, and some of it is on floating storage. If you have to break down in terms of average what you are paying, what have you paid on average to secure these cargoes of wheat?
Speaker #2: But if you have to break down, in terms of average, what you're paying—what have you paid on average to secure these cargoes of wheat?
Speaker #1: I mean, for the first half, it was averaging below $280, I would say, for the wheat. However, for the new ones, no, there is a price increase.
Haitham bin Mohamed Ali Al-Fannah: For the H1, it was averaging below $280, I would say, for the wheat. However, for the new ones, no. There is a price increase. We are seeing certain origins, like for example, Australian wheat move to above $300 levels.
Haitham Al Fannah: For the H1, it was averaging below $280, I would say, for the wheat. However, for the new ones, no. There is a price increase. We are seeing certain origins, like for example, Australian wheat move to above $300 levels.
Speaker #1: I mean, we are seeing certain origins, like, for example, Australian wheat, move to above $300 levels.
Speaker #2: Okay. And the subsidy mechanism is very well documented with the government, right? So even the payment terms are agreed upon, and they're not going to make you wait for, like, I don't know, two years to pay you.
[Analyst]: Okay. The subsidy mechanism is very well documented with the government, right? So even the payment terms are agreed upon, and they are not going to make you wait for, I do not know, 2 years to pay you if at such time that you actually start paying more than $300 for your actual price that you are securing these cargoes at. Just wanted to reflect and get your views on how quickly will the government pay you, assuming that the $300 subsidy is hit, that level is hit?
Abbas Kanchwala: Okay. The subsidy mechanism is very well documented with the government, right? So even the payment terms are agreed upon, and they are not going to make you wait for, I do not know, 2 years to pay you if at such time that you actually start paying more than $300 for your actual price that you are securing these cargoes at. Just wanted to reflect and get your views on how quickly will the government pay you, assuming that the $300 subsidy is hit, that level is hit?
Speaker #2: If at such time that you actually start paying more than $300 for your actual price that you're securing these cargoes at—so I just wanted to reflect and get your views on how quickly will the government pay you?
Speaker #2: Assuming that $300 subsidy is hit, you know, that level is reached.
Speaker #1: I think the subsidy mechanism is a mature mechanism. I mean, there is already clarity in terms of the process and claim process. I mean, we don't really face any difficulties collecting the subsidy amount.
Haitham bin Mohamed Ali Al-Fannah: I think the subsidy mechanism is a mature mechanism. There is already clarity in terms of the claim process. We do not really face any difficulties collecting the subsidy amount. You just need to go through the process. There is an auditor appointed by the government who comes and checks, and then based on that, we finalize the numbers and the government pays. So the government has been very cooperative in processing these payments. We did not experience any major delays, I would say.
Haitham Al Fannah: I think the subsidy mechanism is a mature mechanism. There is already clarity in terms of the claim process. We do not really face any difficulties collecting the subsidy amount. You just need to go through the process. There is an auditor appointed by the government who comes and checks, and then based on that, we finalize the numbers and the government pays. So the government has been very cooperative in processing these payments. We did not experience any major delays, I would say.
Speaker #1: It just needs to go through the process. There is an auditor appointed by the government who comes and checks, and then based on that, we finalize the numbers and the government pays.
Speaker #1: So, the government has been very cooperative in processing these payments. We did not experience any major delays, I would say.
Speaker #2: And on the non-wheat side grains, you know, is there a conversation with the government where this, you know, because you spoke about the perfect storm, high freight rates, you know, El Nino potentially being, you know, very difficult this time, fertilizer prices going up.
[Analyst]: And on the non-wheat side grains, is there a conversation with the government where this. Because you spoke about the perfect storm, high freight rates, El Niño potentially being very difficult this time, fertilizer prices going up. So if you look at all these things and how important even the feed mill business is to the country, is there a conversation to introduce some sort of a subsidy mechanism to protect the company and its shareholders, and to protect the overall market?
Abbas Kanchwala: And on the non-wheat side grains, is there a conversation with the government where this. Because you spoke about the perfect storm, high freight rates, El Niño potentially being very difficult this time, fertilizer prices going up. So if you look at all these things and how important even the feed mill business is to the country, is there a conversation to introduce some sort of a subsidy mechanism to protect the company and its shareholders, and to protect the overall market?
Speaker #2: So if you look at all these things, and how important even the feed mill business is to the country, is there a conversation to introduce some sort of a subsidy mechanism to protect the company and its shareholders as well, and to protect the overall market?
Speaker #1: Yes. I mean, we already started this discussion with the government, so we will wait for further directions from them. We've already raised these points, and they are actually aware of the situation.
Haitham bin Mohamed Ali Al-Fannah: Yes. We already started this discussion with the government, so we will wait for further directions from there. We already raised these points, and they are aware, actually, of the situation. Again, from a food security point of view, so they are closely working with us in basically managing the situation.
Haitham Al Fannah: Yes. We already started this discussion with the government, so we will wait for further directions from there. We already raised these points, and they are aware, actually, of the situation. Again, from a food security point of view, so they are closely working with us in basically managing the situation.
Speaker #1: Again, from a food security point of view, they are closely working with us in basically managing the situation.
Speaker #2: Okay. Can you reflect, or can you update us on what's happening with the Sohar Flour Mill issue? I believe there was some settlement that was going to be issued with the— sorry, settlement that was reached with the shareholders, but there has been no update since.
[Analyst]: Okay. Can you reflect or can you update us on what is happening with the Sohar Flour Mills issue? I believe there was some settlement that was going to be issued with the. Sorry, a settlement that was reached with the shareholders, but there has been no update since. Can you please update us on what is happening with Sohar Flour Mills?
Abbas Kanchwala: Okay. Can you reflect or can you update us on what is happening with the Sohar Flour Mills issue? I believe there was some settlement that was going to be issued with the. Sorry, a settlement that was reached with the shareholders, but there has been no update since. Can you please update us on what is happening with Sohar Flour Mills?
Speaker #2: You know, can you please update us on what's happening with Sohar Flour Mills?
Speaker #1: Yeah. So, Sohar Flour Mills—the transaction is progressing very well. We will soon be closing this, hopefully in this quarter, Q3. There is significant progress, I would say.
Haitham bin Mohamed Ali Al-Fannah: Yeah. So Sohar Flour Mills, the transaction is progressing very well. Soon we will be closing this, hopefully in this quarter, Q3. There is significant progress, I would say. One I can share with you is, for example, one of the loans was already paid. So let me put it simply, the transaction is progressing very well, and we are expecting to close it before the end of this quarter.
Haitham Al Fannah: Yeah. So Sohar Flour Mills, the transaction is progressing very well. Soon we will be closing this, hopefully in this quarter, Q3. There is significant progress, I would say. One I can share with you is, for example, one of the loans was already paid. So let me put it simply, the transaction is progressing very well, and we are expecting to close it before the end of this quarter.
Speaker #1: I mean, one I can share with you is, for example, we— one of the loans was already paid. So the— let me say it, put it simply, the transaction is progressing very well.
Speaker #1: And we are expecting to close it before the end of this quarter.
Speaker #2: And the nature of the settlement is that you will be running the flour mill itself, right?
[Analyst]: The nature of the settlement is that you will be running the flour mill itself, right?
Abbas Kanchwala: The nature of the settlement is that you will be running the flour mill itself, right?
Speaker #1: Yes. As we updated the market last time, the settlement is basically that the other shareholder will take over the silos, and we will take over the flour mill.
Haitham bin Mohamed Ali Al-Fannah: As we updated the market last time, the settlement is basically that the other shareholder will take over the silos, and we will take over the flour mill. Of course,
Haitham Al Fannah: As we updated the market last time, the settlement is basically that the other shareholder will take over the silos, and we will take over the flour mill. Of course,
Speaker #1: And of course, I mean, this is all subject to basically clearing the legal aspects around the deal.
[Analyst]: Okay
Abbas Kanchwala: Okay
Haitham bin Mohamed Ali Al-Fannah: this is all subject to basically clearing the legal aspects around the deal.
Haitham Al Fannah: this is all subject to basically clearing the legal aspects around the deal.
Speaker #2: Sure. And I wanted to, you know, speak about the actual Omani market. Now, with all the challenges you face, I think the smaller players, you know, who don't have the financial bandwidth, are obviously going to be suffering even more, right?
[Analyst]: Sure. I wanted to speak about the actual Omani market now, all the challenges you face. I think the smaller players who do not have the financial bandwidth, they are obviously going to be suffering even more, right? So from that perspective, in terms of utilization, in terms of actually the demand in the market and who is going to supply the demand, I would imagine Oman Flour Mills stands in a very good position, right? Competitively speaking, I would imagine your competitive position has got better after the crisis than it was before. I just want to hear your views on how you look at this, basically. Just to reflect on the demand side of the Oman equation.
Abbas Kanchwala: Sure. I wanted to speak about the actual Omani market now, all the challenges you face. I think the smaller players who do not have the financial bandwidth, they are obviously going to be suffering even more, right?
Speaker #2: I mean, so from that perspective, in terms of utilization—in terms of, you know, actually the demand in the market and who’s going to supply the demand—I would imagine Oman Flour Mills stands in a very good position, right?
Abbas Kanchwala: So from that perspective, in terms of utilization, in terms of actually the demand in the market and who is going to supply the demand, I would imagine Oman Flour Mills stands in a very good position, right? Competitively speaking, I would imagine your competitive position has got better after the crisis than it was before. I just want to hear your views on how you look at this, basically. Just to reflect on the demand side of the Oman equation.
Speaker #2: And competitively speaking, I would imagine your competitive position has gotten better after the crisis than it was before. I just want to hear your views on how you look at this, basically.
Speaker #2: Just to reflect on the demand side of the Oman equation.
Speaker #1: Well, see, the demand—we are seeing a little bit of, I would say, not major impact when it comes to the demand for the products.
Haitham bin Mohamed Ali Al-Fannah: Well, see, the demand, we are seeing a little bit of, I would say, not major impact when it comes to the demand for the products. Actually, there is a growth. This storm also brought some opportunities, and this is clearly evident in Sohar Flour Mills performance. We have seen a lot of transshipments. A lot of people bring their wheat, also their grains to Sohar Flour Mills, store it there, and then basically transport it by land to neighboring countries. This crisis actually brought a little bit of opportunities, which we capitalized, and the results show that.
Haitham Al Fannah: Well, see, the demand, we are seeing a little bit of, I would say, not major impact when it comes to the demand for the products. Actually, there is a growth. This storm also brought some opportunities, and this is clearly evident in Sohar Flour Mills performance. We have seen a lot of transshipments. A lot of people bring their wheat, also their grains to Sohar Flour Mills, store it there, and then basically transport it by land to neighboring countries. This crisis actually brought a little bit of opportunities, which we capitalized, and the results show that.
Speaker #1: I mean, actually, there is growth. And yes, this storm also brought some opportunities. This is clearly evident in Sohar's performance. We've seen a lot of transshipments—a lot of people bringing their wheat and other grains to Sohar, storing them there, and then basically transporting them by land to neighboring countries.
Speaker #1: So this crisis actually, yes, I mean, brought a little bit of, I would say, opportunities which we capitalized on, and the results show that.
Speaker #2: And if you reflect on the first-half performance of the company, and if you were to sort of see into the second half, are you expecting a big deterioration, or do you expect profitability more or less to be maintained, given all the initiatives that you've taken at your end to actually secure your supply of wheat at pretty good prices?
[Analyst]: If you reflect on the H1 performance of the company, and if you were to sort of see into the H2, are you expecting a big deterioration, or you expect profitability more or less to be maintained given all the initiatives that you have taken at your end to actually secure your supply of wheat at pretty good prices? You told me $280. That seems like a great price for you given that whatever was happening in the market.
Abbas Kanchwala: If you reflect on the H1 performance of the company, and if you were to sort of see into the H2, are you expecting a big deterioration, or you expect profitability more or less to be maintained given all the initiatives that you have taken at your end to actually secure your supply of wheat at pretty good prices? You told me $280. That seems like a great price for you given that whatever was happening in the market.
Speaker #2: You told me $280. That seems like a great price for you, given whatever was happening in the market.
Speaker #1: Sure. Sure. I mean, see, I don't really want to give— I mean, comments on projections, et cetera. But we are comfortable, I mean, that this year we will close the year with good results.
Haitham bin Mohamed Ali Al-Fannah: Sure. See, I do not want really to give comments on projections, et cetera, but we are comfortable that this year we will close the year with good results. Again, as you are aware, the inventory, there is a lagging effect. The lagging effect means we still have some of that economically priced grains that will support the margins. One. Two is, do not forget, H1 we had that one-off or one-time gain for disposing the shares of Oman Fisheries Co SAOG. So that impact will not be there. So we are comfortable that the results will be in line, I would say, with the H1.
Haitham Al Fannah: Sure. See, I do not want really to give comments on projections, et cetera, but we are comfortable that this year we will close the year with good results. Again, as you are aware, the inventory, there is a lagging effect. The lagging effect means we still have some of that economically priced grains that will support the margins. One. Two is, do not forget, H1 we had that one-off or one-time gain for disposing the shares of Oman Fisheries Co SAOG. So that impact will not be there. So we are comfortable that the results will be in line, I would say, with the H1.
Speaker #1: Again, as you are aware, the inventory has a lagging effect. So, the lagging effect means we still have some of those economically priced grains that will support the margins.
Speaker #1: One. Two is, don't forget, in the first half, we had that one-off, or one-time, gain from disposing of the shares of Oman Fisheries. So that impact will not be there.
Speaker #1: So, we are comfortable that the results will be in line, I would say, with the first half.
Speaker #2: Thank you. And my last question is—I'll go back in the queue if I have more questions—is: Can you reflect on the other growth initiatives the company has embarked upon? You know, a couple of things that you've announced over the years?
[Analyst]: Thank you. My last question is, and I will go back and queue if I have more questions is, can you reflect on the other growth initiatives the company has embarked upon? There are a couple of things that you have announced over the years. Which are the ones that you are most excited about as a revenue and profit opportunity for the company?
Abbas Kanchwala: Thank you. My last question is, and I will go back and queue if I have more questions is, can you reflect on the other growth initiatives the company has embarked upon? There are a couple of things that you have announced over the years. Which are the ones that you are most excited about as a revenue and profit opportunity for the company?
Speaker #2: Which are the ones that you're most excited about as a revenue and profit opportunity for the company?
Speaker #1: Well, we do have, as we mentioned, as we publicly revealed—I mean, we do have quite an intensive pipeline of projects. Some of them are quite new, like your insect meal project, the chlorella project.
Haitham bin Mohamed Ali Al-Fannah: Well, we do have, as we publicly revealed, we do have a quite intensive pipeline of projects. Some of them are quite new, like your insect meal project, the chlorella project. We are trying to find alternative protein sources to support the feed industry. We are basically progressing in this front. Our team are busy in terms of analyzing the markets, looking at the best technical solution to basically materialize these ideas. There is work in progress in all these projects.
Haitham Al Fannah: Well, we do have, as we publicly revealed, we do have a quite intensive pipeline of projects. Some of them are quite new, like your insect meal project, the chlorella project. We are trying to find alternative protein sources to support the feed industry. We are basically progressing in this front. Our team are busy in terms of analyzing the markets, looking at the best technical solution to basically materialize these ideas. There is work in progress in all these projects.
Speaker #1: We are trying to find alternative protein sources, I mean, to support the feed industry. So we are basically progressing on this front. Our team is busy analyzing the markets and looking at the best technical solutions to basically materialize these ideas.
Speaker #1: So, there is work in progress on all these projects.
Speaker #2: Okay. But in the foreseeable future, a large part of the profitability and revenue is going to keep coming from the feed mill and the flour mill.
[Analyst]: Okay. But in the foreseeable future, a large part of the profitability and revenue is going to keep coming from the feed mill and the flour mill?
Abbas Kanchwala: Okay. But in the foreseeable future, a large part of the profitability and revenue is going to keep coming from the feed mill and the flour mill?
Speaker #1: Feed mill, flour mill, and as I mentioned, for example, the egg business is doing very well. The poultry business is doing very well. AKEF Food Industry as a bakery is also improving its results.
Haitham bin Mohamed Ali Al-Fannah: Feed mill, flour mill, and as I mentioned, for example, the egg business is doing very well. The poultry business is doing very well. Al Qiyah food industry, the bakery, is also improving the results. So the portfolio is shaping up from portfolio point of view. We do have couple of projects that for companies which are still in the growth phase, like Al Samail, for example. Still, the market building up is a little bit behind, I would say, but we are progressing over there. In a nutshell, the growth will be mainly coming from flour and feed. But the other businesses are also starting to bring a significant contribution to the bottom line.
Haitham Al Fannah: Feed mill, flour mill, and as I mentioned, for example, the egg business is doing very well. The poultry business is doing very well. Al Qiyah food industry, the bakery, is also improving the results. So the portfolio is shaping up from portfolio point of view. We do have couple of projects that for companies which are still in the growth phase, like Al Samail, for example.
Speaker #1: So the portfolio is shaping up. I mean, from a portfolio point of view, we do have a couple of projects or companies which are still, I mean, in the growth phase.
Speaker #1: I mean, like Alfamail, for example—still, I mean, the market building up is a little bit behind, I would say. But we are progressing over there.
Haitham Al Fannah: Still, the market building up is a little bit behind, I would say, but we are progressing over there. In a nutshell, the growth will be mainly coming from flour and feed. But the other businesses are also starting to bring a significant contribution to the bottom line.
Speaker #1: So, in a nutshell, the growth will be mainly coming from flour and feed, but the other businesses are also starting to make a significant contribution to the bottom line.
Speaker #2: Okay. Can you reflect on what happened with Oman Fisheries when you took that position? Of course, there was something that you were looking at in terms of outlook, and now that you've exited, obviously at much lower prices than you entered.
[Analyst]: Okay. Can you reflect on what happened with Oman Fisheries when you took that position? Of course, there was something that you were looking at in terms of outlook, and now that you've exited, obviously at much lower prices than you entered. Can you just reflect on the whole investment journey of Oman Fisheries and what has that taught the company, if at all? Just from us to appreciate what happened on this transaction.
Abbas Kanchwala: Okay. Can you reflect on what happened with Oman Fisheries when you took that position? Of course, there was something that you were looking at in terms of outlook, and now that you've exited, obviously at much lower prices than you entered. Can you just reflect on the whole investment journey of Oman Fisheries and what has that taught the company, if at all? Just from us to appreciate what happened on this transaction.
Speaker #2: Can you just reflect on the whole investment journey of Oman Fisheries and, you know, what that has taught the company, if at all, you know?
Speaker #2: Just to, just from us, to appreciate what happened on this transaction.
Speaker #1: Well, I think, Abbas, we can have a different discussion regarding Oman Fisheries. But again, I would say, I mean, it was a very good opportunity for us to explore how we can basically expand our business from the normal flour and feeds business.
Haitham bin Mohamed Ali Al-Fannah: Well, I think, Abbas, we can have a different discussion regarding Oman Fisheries. But again, I would say, it was a very good opportunity for us to explore how can we basically expand our business from the normal flour and feeds business. However, certain things did not work out, and then we decided to exit. That is it.
Haitham Al Fannah: Well, I think, Abbas, we can have a different discussion regarding Oman Fisheries. But again, I would say, it was a very good opportunity for us to explore how can we basically expand our business from the normal flour and feeds business. However, certain things did not work out, and then we decided to exit. That is it.
Speaker #1: However, certain things did not work out, and then we decided to exit. That's it.
Speaker #2: Okay, thank you very much. I appreciate the time and the patience with which you've answered my questions. The company is obviously doing fantastic and, you know, under your and Mr. Fannar's management, I can see the changes. Congratulations again, and I look forward to interacting with you in the future.
[Analyst]: Okay. Thank you very much. Appreciate the time and the patience with which you have answered my question. The company is obviously doing fantastic and under yours and Mr. Fahd's management, I can see the changes. Congratulations again, and look forward to interacting with you in the future. Thank you.
Abbas Kanchwala: Okay. Thank you very much. Appreciate the time and the patience with which you have answered my question. The company is obviously doing fantastic and under yours and Mr. Fahd's management, I can see the changes. Congratulations again, and look forward to interacting with you in the future. Thank you.
Speaker #2: Thank you.
Speaker #1: Thank you, Abbas.
Haitham bin Mohamed Ali Al-Fannah: Thank you, Abbas.
Haitham Al Fannah: Thank you, Abbas.
[Company Representative] (Oman Flour Mills): Okay. Thank you, Abbas. Anyone else with any questions or comments? Yes. Any final questions before we conclude?
[Company Representative] (Oman Flour Mills): Okay. Thank you, Abbas. Anyone else with any questions or comments? Yes. Any final questions before we conclude?
Speaker #2: Okay, thank you, Abbas. Anyone else with any questions or comments? Yes? Any final questions before we conclude?
Speaker #1: I just, sorry.
[Analyst]: I just
Abbas Kanchwala: I just
[Analyst]: Yes, Pranav.
[Company Representative] (Oman Flour Mills): Yes, Pranav.
[Analyst]: Sorry. If no one has any questions, I just wanted to understand, if you can take us through the Oman market in terms of what is the total demand, how much is imported, how much is provided between Salalah Mills Company and you guys, just for us to understand the market and appreciate the market a little more.
Abbas Kanchwala: Sorry. If no one has any questions, I just wanted to understand, if you can take us through the Oman market in terms of what is the total demand, how much is imported, how much is provided between Salalah Mills Company and you guys, just for us to understand the market and appreciate the market a little more.
Speaker #2: If no one has any questions, I just wanted to understand, if you can take us through the, you know, the Oman market in terms of what's the total demand, you know, how is it, how much is imported, how much is provided between Salalah flour mills and you guys, just for us to understand the market and appreciate the market a little more.
Speaker #1: Which market, Abbas?
Haitham bin Mohamed Ali Al-Fannah: Which market, Abbas?
Haitham Al Fannah: Which market, Abbas?
Speaker #2: Both the feed and the flour side of the market.
[Analyst]: Both the feed and the flour side of the market.
Abbas Kanchwala: Both the feed and the flour side of the market.
Speaker #1: Fine. So, in terms of the flour market, as it is known, there is an oversupply position in the flour business—in the flour market. We do have almost seven flour mills in Oman.
Haitham bin Mohamed Ali Al-Fannah: Fine. In terms of the flour market, as it is known that there is an oversupply position in the flour market. We do have almost seven flour mills in Oman. The market is, I would say, saturated when it comes to milling capacity. That is why you see a lot of players, including us, we target also export and try to expand our business to export market. In terms of feed also, there is quite significant capacities available to cater for local markets. Local market is mainly linked to projects. If there are farms, new farms, like new poultry farm, new cattle farm, that basically plays a big significant role in increasing the demand.
Haitham Al Fannah: Fine. In terms of the flour market, as it is known that there is an oversupply position in the flour market. We do have almost seven flour mills in Oman. The market is, I would say, saturated when it comes to milling capacity. That is why you see a lot of players, including us, we target also export and try to expand our business to export market. In terms of feed also, there is quite significant capacities available to cater for local markets. Local market is mainly linked to projects. If there are farms, new farms, like new poultry farm, new cattle farm, that basically plays a big significant role in increasing the demand.
Speaker #1: So, the market is, I would say, saturated when it comes to milling capacity. That is why you see a lot of players, including us, also targeting export and trying to expand our business to the export market.
Speaker #1: In terms of feed also, there are quite significant capacities available to cater to local markets. I mean, the local market is mainly linked to projects.
Speaker #1: I mean, if there are farms, new farms, like new poultry farms or new cattle farms, that basically plays a significant role in increasing the demand.
Speaker #1: So far, I mean, up to this year, there have been no significant improvements when it comes to new projects, apart from the expected Nama Poultry project, which was basically announced by the government—that there is a new partner coming in.
Haitham bin Mohamed Ali Al-Fannah: So far, up to this year, there is no significant improvement when it comes to new projects, apart from the expected project of Al Namaa Poultry, which was basically announced by the government that there is a new partner coming in. So we are looking forward for that project to materialize in 2027, and that will increase the demand. In terms of supply, I think also from a supply point of view, we are covering the market between us and the other players. Yes, there is some imports coming in, especially from neighboring countries, mainly for grains and some finished goods, also. Sold to local farmers also.
Haitham Al Fannah: So far, up to this year, there is no significant improvement when it comes to new projects, apart from the expected project of Al Namaa Poultry, which was basically announced by the government that there is a new partner coming in. So we are looking forward for that project to materialize in 2027, and that will increase the demand. In terms of supply, I think also from a supply point of view, we are covering the market between us and the other players. Yes, there is some imports coming in, especially from neighboring countries, mainly for grains and some finished goods, also. Sold to local farmers also.
Speaker #1: So we are looking forward to that project materializing in 2027, and that will increase the demand. In terms of supply, I think, also from a supply point of view, we are covering the market between us and the other players.
Speaker #1: Yes, there are some imports coming in, especially from neighboring countries—mainly for grains and some finished goods also. So, to local farmers as well.
Speaker #2: Thank you. Thank you, Aidan. Abbas, you can go ahead.
[Analyst]: Thank you. Thank you very much.
Abbas Kanchwala: Thank you. Thank you very much.
[Company Representative] (Oman Flour Mills): Abbas, this Saif Alrawahi, you can go ahead.
[Company Representative] (Oman Flour Mills): Abbas, this Saif Alrawahi, you can go ahead.
Speaker #3: Thank you. I have a couple of questions. For the bioproduct Oman, when do you expect to reach break-even, and is there any further capital needed for this?
Saif Alrawahi: Thank you. I have a couple of questions. For the Omani Bioproducts Company, when do you expect to have the break even, and is there any further capital needed for this?
Saif Alrawahi: Thank you. I have a couple of questions. For the Omani Bioproducts Company, when do you expect to have the break even, and is there any further capital needed for this?
Speaker #1: Well, bio is—this is the first year of operations. I mean, this is a brand new project. The project has basically two main lines.
Haitham bin Mohamed Ali Al-Fannah: Well, Omani Bioproducts Company, this is the first year of operation. This is a brand-new project. The project has basically two main lines. One is basically feed mill, and the other one is dedicated for aqua. Both setups are done. In the aqua, there is basically a market penetration process. It takes time, a little bit, to build the market base for such projects. So we are expecting, Inshallah, this to be ramped up very quickly. For the feed, there are some plans to enhance the capacity utilization, and Inshallah, by Q4, we are expecting to have some progress over there. So I would say 2027, we will see big improvements when it comes to Omani Bioproducts Company. Omani Bioproducts Company is 100% subsidiary of Oman Flour Mills. So any funding will be done from Oman Flour Mills operations. We treat Omani Bioproducts Company as an extension of Oman Flour Mills.
Haitham Al Fannah: Well, Omani Bioproducts Company, this is the first year of operation. This is a brand-new project. The project has basically two main lines. One is basically feed mill, and the other one is dedicated for aqua. Both setups are done. In the aqua, there is basically a market penetration process. It takes time, a little bit, to build the market base for such projects. So we are expecting, Inshallah, this to be ramped up very quickly. For the feed, there are some plans to enhance the capacity utilization, and Inshallah, by Q4, we are expecting to have some progress over there.
Speaker #1: One is basically a feed mill, and the other one is dedicated for aqua. Both setups are basically done. And in the aqua, there is basically a market penetration process.
Speaker #1: It takes a little bit of time to build the market base for such projects. So, we are expecting, inshallah, this to ramp up very quickly.
Speaker #1: For the feed, there are some plans. I mean, to enhance the capacity, utilization, and inshallah, by Q4, we are expecting to have some progress over there.
Speaker #1: So I would say, in 2027, we will see big improvements when it comes to bio. Now, bio is a 100% subsidiary of Oman Flour Mills.
Haitham Al Fannah: So I would say 2027, we will see big improvements when it comes to Omani Bioproducts Company. Omani Bioproducts Company is 100% subsidiary of Oman Flour Mills. So any funding will be done from Oman Flour Mills operations. We treat Omani Bioproducts Company as an extension of Oman Flour Mills. It is like a different site to produce the products for the same customers.
Speaker #1: So, any funding will be done through Oman Flour Mills operations. We treat Bio as an extension of Oman Flour Mills; it is like a different site to produce the products for the same customers.
Haitham bin Mohamed Ali Al-Fannah: It is like a different site to produce the products for the same customers.
Speaker #3: Okay, thank you. The other question I have is for the Uzbekistan lab. It has now been almost two years since launch, and it still has minimal revenue.
Saif Alrawahi: Okay. Thank you. The other question I have is for the Uzbekistan lab. It has been almost now two years after launch. It still has minimum revenue. What is the plan for that, to increase revenue or to have another thought about it?
Saif Alrawahi: Okay. Thank you. The other question I have is for the Uzbekistan lab. It has been almost now two years after launch. It still has minimum revenue. What is the plan for that, to increase revenue or to have another thought about it?
Speaker #3: What's the plan for that—to increase revenue, or do you have another thought about it?
Speaker #1: Well, a good question, Saif. I mean, see, Uzbekistan—the setup is ready. Everything is ready. We are ready to accept business. However, due to the regulations in the country, we've seen a little bit of a slowdown in terms of achieving our targets.
Haitham bin Mohamed Ali Al-Fannah: Well, a good question, Saif. Uzbekistan, the setup is ready. Everything is ready. We are ready to accept business. However, due to the regulations in the country, we have seen a little bit of a slowdown in terms of achieving our targets. So we are trying to explore with the government of Uzbekistan on how to ease these restrictions, and hopefully, within Q4, we will make the decision whether we continue in Uzbekistan or we withdraw from the investment.
Haitham Al Fannah: Well, a good question, Saif. Uzbekistan, the setup is ready. Everything is ready. We are ready to accept business. However, due to the regulations in the country, we have seen a little bit of a slowdown in terms of achieving our targets. So we are trying to explore with the government of Uzbekistan on how to ease these restrictions, and hopefully, within Q4, we will make the decision whether we continue in Uzbekistan or we withdraw from the investment.
Speaker #1: So, we are trying to explore with the government of Uzbekistan how to ease these restrictions. Hopefully, within Q4, we will make the decision whether we continue in Uzbekistan or withdraw from the investment.
Speaker #3: Okay, thank you. And the other question I have is for MDF, the modern dairy factory. It's swung to a loss now due to low utilization.
Saif Alrawahi: Okay. Thank you. The other question I have for the Modern Dairy Factory. It is swing to a loss now for low utilizations. When do you think the utilization rate will increase, and we will have profit out of it?
Saif Alrawahi: Okay. Thank you. The other question I have for the Modern Dairy Factory. It is swing to a loss now for low utilizations. When do you think the utilization rate will increase, and we will have profit out of it?
Speaker #3: I mean, when do you think the utilization rate will increase and will have profit out of it?
Speaker #1: Well, again, the sales team is working to basically increase the top line. The trend is very encouraging. I mean, we started seeing sales crossing 500,000 per month, which is a significant milestone achieved.
Haitham bin Mohamed Ali Al-Fannah: Well, again, the sales team are working to basically increase the top line. The trend is very encouraging. We started seeing sales crossing OMR 500,000 per month, which is significant milestone achieved. So the trajectory is positive. When we will break even, this is a very difficult question because you have to understand the dairy business, similar to any food business, is linked to the commodity price. And when we buy milk powder, basically the price has increased. So that brings also additional pressure to the company. You cannot just pass the prices to the consumers. Yes, we did approach Consumer Protection Authority for increasing the price of the product, and we will be implementing this price increase gradually as we go. So we think that will help the company achieve better results in the coming future.
Haitham Al Fannah: Well, again, the sales team are working to basically increase the top line. The trend is very encouraging. We started seeing sales crossing OMR 500,000 per month, which is significant milestone achieved. So the trajectory is positive. When we will break even, this is a very difficult question because you have to understand the dairy business, similar to any food business, is linked to the commodity price. And when we buy milk powder, basically the price has increased. So that brings also additional pressure to the company.
Speaker #1: So, the trajectory is positive. When we will break even—this is a very difficult question, because you have to understand the dairy business as well. I mean, similar to any food business, it's linked to the commodity price.
Speaker #1: And when we buy milk powder, basically the price is on the increase. So that also brings additional pressure to the company.
Speaker #1: You cannot just pass the prices to the consumers. Yes, we did approach Consumer Protection for increasing the price of the product, and we will be implementing this price increase gradually as we go.
Haitham Al Fannah: You cannot just pass the prices to the consumers. Yes, we did approach Consumer Protection Authority for increasing the price of the product, and we will be implementing this price increase gradually as we go. So we think that will help the company achieve better results in the coming future.
Speaker #1: So, we think that will help the company achieve better results in the coming future.
Speaker #3: Thank you. Thank you for the good work. And that's it from my side.
Saif Alrawahi: Thank you. Thank you for the good work, and that is it from my side.
Saif Alrawahi: Thank you. Thank you for the good work, and that is it from my side.
Speaker #1: Francis.
Haitham bin Mohamed Ali Al-Fannah: Thank you, Saif.
Haitham Al Fannah: Thank you, Saif.
Speaker #2: Thank you, Saif. If anybody has any other question, comments before we conclude. Saif, do you have any other question? You can go ahead unless you're.
[Company Representative] (Oman Flour Mills): Thank you, Saif. If anybody has any other question, comments before we conclude. Saif, if you have any other question, you can go ahead unless that was from the previous.
[Company Representative] (Oman Flour Mills): Thank you, Saif. If anybody has any other question, comments before we conclude. Saif, if you have any other question, you can go ahead unless that was from the previous.
Speaker #2: That was from the previous
Speaker #3: No, that was from the previous one.
Saif Alrawahi: No, that was from the previous one.
Saif Alrawahi: No, that was from the previous one.
Speaker #2: Okay, thank you. Okay, anyone else? Okay, yeah, go ahead.
[Company Representative] (Oman Flour Mills): Okay.
[Company Representative] (Oman Flour Mills): Okay.
Saif Alrawahi: Thank you.
Saif Alrawahi: Thank you.
[Company Representative] (Oman Flour Mills): Okay. Anyone else? Okay. Yeah. Go ahead.
[Company Representative] (Oman Flour Mills): Okay. Anyone else? Okay. Yeah. Go ahead.
Speaker #3: Sorry. If nobody has a question, for the dividend, I see your liquidity is less than in the last six months. So, are we expecting any impact on the dividend compared to last year?
Saif Alrawahi: Sorry. If nobody has a question. For the dividend, I see your liquidity is less than the last 6 months. So are we expecting any impact in the dividend compared to last year?
Saif Alrawahi: Sorry. If nobody has a question. For the dividend, I see your liquidity is less than the last 6 months. So are we expecting any impact in the dividend compared to last year?
Speaker #1: Liquidity for the first half is impacted because of the inventory buildup, as well as the investment that we made in Arabian Food Production Company.
Haitham bin Mohamed Ali Al-Fannah: Liquidity for the H1 is impacted because of the inventory buildup as well as the investment that we made in Arabian Food Production Company. But we don't have any liquidity issues, we don't really see any major impact when it comes to paying dividends for this year.
Haitham Al Fannah: Liquidity for the H1 is impacted because of the inventory buildup as well as the investment that we made in Arabian Food Production Company. But we don't have any liquidity issues, we don't really see any major impact when it comes to paying dividends for this year.
Speaker #1: We don't have any liquidity issues, so we don't really see any major impact when it comes to paying dividends for this year.
Speaker #3: Okay. Thank you.
Saif Alrawahi: Okay. Thank you.
Saif Alrawahi: Okay. Thank you.
Speaker #2: Saif? Anyone else? Okay. If there are no more questions, thank you all. That brings us to the end of today's discussion. Thank you again for joining us today, for your questions, and your continued interest in Oman Flour Mills Company.
[Company Representative] (Oman Flour Mills): Saif. Anyone else? If there are no more questions, thank you all. That brings us to the end of today's discussion. Thank you all again for joining us today, for your questions, and your continued interest in Oman Flour Mills Company. We look forward to engaging with you, Inshallah, next time. We will be conducting a new session for the full year 2026. That is it. Thank you very much.
[Company Representative] (Oman Flour Mills): Saif. Anyone else? If there are no more questions, thank you all. That brings us to the end of today's discussion. Thank you all again for joining us today, for your questions, and your continued interest in Oman Flour Mills Company. We look forward to engaging with you, Inshallah, next time. We will be conducting a new session for the full year 2026. That is it. Thank you very much.
Speaker #2: We look forward to engaging with you, inshallah, next time. We will be conducting a new session for the full year 2026. And yeah, that's it.
