“Our business is largely based on imported key raw materials.“
ARASCO has always been important to food security in the Kingdom and has operated a profitable business consistently for many years. How did 2020 impact your bottom line, and what do you expect for the first two quarters of 2021?
Despite the pandemic, ARASCO has maintained its business continuity by retaining its talented employees, operating its assets without interruptions, and serving its customers. In doing so, ARASCO was able to maintain a healthy bottom line in 2020. We seek to maintain our strong performance in 2021 by focusing on two key areas: enhancing our customer intimacy and experience and driving our manufacturing excellence program.
Your six business units cover key areas in the food production chain in the Kingdom. How has the balance between importing essential materials and producing locally shifted over the course of 2020, and will your future strategy influence that balance?
Our business is largely based on imported key raw materials. The pandemic has pressure-tested the integrity and efficiency of our supply chains. We are glad to note we maintained our business continuity despite the pandemic. Having said that, as part of our 2025 strategy, we are working toward upward integration of our supply chains wherever possible, as well as exploring local and international key strategic partnerships to mitigate commodity—especially grain—availability risks.
Your business units are disparate; how do you work to increase synergies between them?
At ARASCO, we place a premium on demonstrating our five corporate values, one of which is collaborate. Hence, collaboration across our businesses and leveraging associated synergies are ingrained in our corporate culture. We work mindfully to break existing silos in the organization while preventing the formation of new silos through candid dialogue. I engage with the ARASCO leadership team, consisting of all SBU presidents and corporate leaders, every week to discuss critical business subjects. Our strategy and business planning process coupled with a culture of candor ensure the leaders across the organization engage with each other to practice constructive challenge and identify the ways in which they can serve internal customers. Finally, our performance management and incentive payout system promote not only individual drive, but also collective success.
How has demand shifted this year due to the pandemic?
Since we operate in the food security sector, and food is crucial for our sustenance, demand for our products and services did not decline despite the pandemic. This is evidenced in our factories achieving record productions. What has evolved, however, are our sales channels. We saw a greater shift toward e-commerce and direct delivery. We responded by providing direct customer delivery services for ARASCO FOOD’s Entaj chicken. We will be gradually rolling out these services to wider geographies and offer Entaj red meat and other protein offerings through these channels as well. We are also exploring similar solutions in our other businesses.
What are your upcoming investment plans in the medium term?
Our upcoming investments are largely centered around four key categories, all of which are focused on serving our customers better and linked to building ARASCO’s future capabilities. One of these categories is human capital enhancement, whereby we invest in attracting the best talent at ARASCO, instituting the right development programs to build the competencies of our employees, and investing in our talent retention program. All these investments are geared toward ARASCO’s strategic focus of becoming the employer of choice in the industry. The other categories are digitalization and technology enablement, where we invest in enhancing our technology enablement to manage our businesses efficiently and effectively as well as to serve our customers better; manufacturing capabilities and excellence, where we invest in maximizing our asset reliability, milking our assets to their fullest capabilities, and building new capabilities where needed; and strengthening our competitive advantage and diversifying our portfolio, whereby we invest in research and innovation to drive our organic product portfolio diversification and in key strategic partnerships to strengthen our competitive advantages.