Tanmiah Food Company (2281) Q4 FY2025 Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. Welcome to Fourth Quarter 2025 Earnings Call of Tanmiah. Today, we have with us the senior management of the company. The meeting will comprise 60 minutes, starting with a quick presentation followed by the Q&A session. [Operator Instructions] Without any delay, I would hand over the mic to the management for their initial remarks. Over to the management.

Thank you, Saad. Good afternoon, everyone, and welcome to Tanmiah Food Company's Full Year 2025 Earnings Presentation. Thank you for joining us today. We would also like to extend our appreciation to Al Rajhi Capital for hosting us once again. My name is Laura Frega, Head of Investor Relations, and I'm joined today by the CEO of our Fresh Poultry division, Marcos Delorenzo; our Chief Financial Officer, Fadi Qutishat; and our Chief Transformation Officer, Irfan Nagi. I would like to note that our Group CEO, Zulfiqar, is unable to attend today as he is recovering from the flu. He extends his sincere apologies for his absence, and his appreciation for your understanding. Marcos Delorenzo will be delivering the key business operations and strategic updates on his behalf. Earlier today, we released our full year 2025 financial results, which are now publicly available on Tadawul. Should you require a copy of the full presentation, our IR team will be happy to assist. Before we begin, please note that today's discussion may include forward-looking statements, which are subject to risks and uncertainties as outlined in our disclaimer. Following the presentation, the management team in attendance will be available to address your questions about our performance, strategy and outlook. With that, I will now hand over to Marcos Delorenzo, who will walk you through the key highlights and business performance for full year 2025.

Thank you, Laura. [Foreign Language]. Good afternoon, everyone, and I wish you a good recovery to Zulfiqar. 2025 has been a year of disciplined execution and meaningful foundational progress for Tanmiah. Even as the broader sector faced pricing pressure, oversupply and cost headwinds, the market demand fundamentals remain strong. Poultry continues to be the preferred protein in the market we serve, offering a healthier, affordable and accessible option. Our focus remains on delivering the highest quality and service while utilizing our assets with optimal efficiency. As we look ahead in 2026, our priorities remain centered on disciplined execution and margin-focused growth. Let me outline this for you. First, on commercial front, we are further sharpening our consistent go-to-market focus on higher-margin products, customers and channels. This includes accelerating our value-added products, introducing cooked and semi-cooked options, deepening partnerships with QSR and food service customers and selectively expanding into new regions and diverse geographies. The objective is clear: drive a more resilient margin accretive mix and channels. Second, we are intensifying our efforts to strengthen the core and optimize our asset base. This means upgrading and repurposing facilities, taking targeted actions on underperforming assets and ensuring that capital allocation remains disciplined and aligned with returns and cash generation. Third, operational excellence remains central. We are maintaining balance sheet discipline, optimizing financial costs and actively managing working capital. At the same time, we are advancing sustainability initiatives that improve energy efficiency, reduce waste and unlock recurring cost savings. Finally, digital enablement and people capabilities are central to driving our strategy. We are scaling automation and digital solutions across the enterprise to drive productivity, while investing in talent, culture and organizational capability to support long-term execution. In summary, our strategy is designed to reinforce the core, improve cost efficiency and steadily shift the portfolio toward higher-margin growth, positioning the business for sustainable long-term value creation for our shareholders. While we continue to grow our production through organic and M&A opportunities, our primary focus in 2026 is disciplined capital allocation, short-term liquidity and debt servicing while maximizing returns from our existing asset base through a flexible hybrid owned and leased model. At the same time, the operational excellence initiatives we began in recent years are expected to start delivering a more visible impact on cash flow and profitability from 2026 onwards as utilization improves. Tanmiah operates an integrated footprint across Saudi Arabia and the wider region, as you see on the screen, built to serve customers' efficiency and scale. Our model spans the full value chain from farming and feed through processing, distribution and restaurant operations, supported by 157 farms, 5 feed mills, 7 hatcheries and multiple processing and distribution facilities across the Kingdom. Our platform is supported by a workforce of almost 3,500 employees. Our presence can be seen across 2,130-plus customer retail stores in the region. We entered the Kuwait market in first quarter of 2025. And today, we serve already almost 630 retail stores across GCC, with Saudi Arabia remaining our core market. In 2025, we also gained early traction in select Asian markets through our QSR partners. This is a testament to our ability to unlock new opportunities in adjacent synergistic markets and advancing toward our long-term vision. In revenue terms, Saudi Arabia accounts for 93% of our total revenue with Bahrain contributing approximately 5% and the remaining balance coming from the growing markets, Kuwait and UAE and other GCC markets, providing both scale and geographic diversification. Our expanded footprint is not only about scale, but also optimizing our cost to serve, improving logistics efficiency and leveraging our distribution network to support margin resilience as volumes grow. Full year 2025 was a year of strong operational momentum, continued margin pressure from challenging pricing and costing conditions. 2025 also marks the first time we are reporting a stand-alone breakdown for restaurant operation, enhancing transparency as this business continued to scale alongside our core Agribusiness segment. Within Agribusiness, which included Fresh Poultry and Animal Feed and Health Products, revenue reached SAR 2.45 billion, up 1.3% year-on-year. Despite sustainable pricing pressure, the business remained operationally resilient, delivering net income of SAR 37 million and a net income margin of 1.5%. Volume growth was a key driver during the year. Fresh Poultry volumes increased to 168 million birds, representing a growth of more than 12.4% year-on-year, supported by higher production capacity and improved output. This performance was supported by a strong distribution footprint of 445 Fresh Poultry distribution routes, enabling broad market coverage and reliable customer service. Restaurant Operations revenues reached SAR 201 million, representing growth of nearly 41.8% year-on-year, driven by continued network expansion and higher activity levels. We closed the year with 95 outlets across the network, adding 14 new stores in 2025, reflecting discipline and focused rollout. Profitability in the restaurant operations remained negative as we reached critical mass with 95 stores. We concluded the year with a net loss of SAR 56 million and a net loss margin of 27.9%, reflecting the ramp-up costs, higher operational expenses as we increased spending to build the brand, coupled with higher aggregator costs. Overall, full year 2025 reflects a year of volume growth and footprint expansion, laying the groundwork for improved unit economics and margin recoveries as we move forward. Asset optimization. As we progress through the investment cycle, our focus has shifted towards optimizing the assets we have built and improving results following the completion of a multiyear investment program. Capital expenditure increased from SAR 298 million for full year in 2024 to SAR 418 million for full year 2025, representing an increase of approximately 40% year-on-year as we deliver and commission new facilities. Our current capital commitments primarily focused on the Agribusiness are balanced across maintenance CapEx and a few approved initiatives on our pipeline, including refurbishing and uplifting selected existing facilities as well as adding new production lines with current processing plants to meet growing QSR demand. Alongside this, we continue to focus on extracting more value from the existing footprint through energy saving and LPG conversion projects and by advancing with our Chinese partners to develop up to 100 broiler houses in Saudi Arabia over time. These actions position us to improve utilization, efficiency and margin as we move forward. In the next slide, you see that we continue to strengthen our value-added portfolio through focus-based innovation and disciplined expansion with an emphasis on locally sourced ready-to-cook and healthier formats that align with evolving consumer preferences and reinforce truly Saudi-made offering. Over the past 3 years, we have launched more than 89 products, approximately 30% of which are considered disruptive, meaning that they enhance our mix toward higher-margin, convenience-driven and premium segments. Today, our portfolio spans from the fresh poultry, further processed products made with 100% Saudi fresh chicken and frozen poultry, supporting a more diverse and resilient business model. In Q4, we launched the Taste Secrets barbecue and butter chicken range, bringing restaurant style flavors into the home, alongside the Tanmiah breaded chicken range made from 100% fresh chicken. This strategic shift towards value-added formats improves margin resilience, reduces exposure to commodity prices volatility and expands the business beyond traditional whole and chilled poultry categories. It's worth to mention that those 2 products were shortlisted as the best innovations for Gulfood 2026, which is a very important exhibition that happens in the region, and both products were selected. Going to Popeyes, our Popeyes strategy is focused on localized growth that builds brand momentum while supporting sustainable long-term performance. At the heart of this approach is deep localization. We operate with a Saudi-first mindset, partnering closely with local agencies and creators to deliver culturally relevant content that resonates authentically with Saudi consumers and strengthens brand affinity. At the same time, we are enhancing the menu architecture to clearly define value and premium tiers while protecting the integrity of our core offering. Flagship launches such as the Shawarma and [indiscernible] have supported customer acquisition, increased transaction volumes and improved in-store traffic. In parallel, we have invested in strengthening the Popeyes brand itself beyond individual promotions. A major brand campaign launched in mid-December is expected to begin contributing to performance in the first quarter of 2026. Through consistency, locally driven storytelling, we are deepening emotional connection and reinforcing long-term brand equity. With that, I will hand over to Fadi, who will take you through the financial performance in more details.

Thank you, Marcos. Good afternoon. Looking at our full year performance, 2025 revenue increased 3.5% year-over-year, rising from SAR 2.56 billion in 2024 to SAR 2.65 billion in 2025. The Agribusiness remained the core revenue contributor. Despite the sales volume growth in the Fresh Poultry of 12.4%, revenue rose by 1.3% year-over-year to SAR 2.45 billion, demonstrating growth demand for our products, offset by lower average selling price compared to 2025 (sic) [ 2024 ], which was driven by sustained supply pressure in the market. Restaurant Operations was the primary driver for top line growth. Revenue reached SAR 201 million in 2025, representing 41.8% year-over-year increase, reflecting continued organic growth and new store openings, bringing the total Popeyes store count to 95 by year-end compared to 81 stores in 2024. Our profitability for 2025 recorded a net loss of SAR 15 million (sic) [ SAR 18.8 million ] compared to net income of SAR 111 million in 2024. To further enhance transparency, we are now showing the profitability breakdown between the Agribusiness and Restaurant Operations. We saw a continued downturn for our Agribusiness in the second half of 2025, primarily driven by sustained pressure on market prices compared to the prior year as both local and imported poultry supply increased. Energy and other cost inflation persisted throughout the year. We partially mitigated those headwinds through the commercial and operational excellence programs that Marcos had mentioned earlier. Despite these factors, the Agribusiness delivered full year profitability. As we continued to execute our expansion plan throughout the year, we officially commissioned 2 state-of-the-art facilities during the quarter, and that happened during the fourth quarter. This led to incremental depreciation and interest expenses. We are at the ramp-up stage of those facilities. And as we maximize utilization, we will see unit cost reductions. Our net losses increased as we continued to scale the Restaurant Operations segment. Despite the 41.8% revenue growth, Popeyes' performance reflected higher operating and ramp-up costs during the year as several newly opened stores remained in the early stage of ramp-up. We intensified efforts to drive transaction growth and strengthen brand visibility, including targeted marketing campaigns and expanded delivery penetration through aggregators resulting in higher spend during the year. Building on the operational and commercial initiatives discussed earlier, I will now talk through our Q4 performance. Total revenue for the quarter reached SAR 713 million, up 4.1% year-over-year, driven primarily by strong volume performance in the Agribusiness as we continue to increase Restaurant Operations revenue at the same time. For the Agribusiness, which comprises Fresh Poultry, Animal Feed and Animal Health, revenue totaled SAR 657 million in Q4. Performance was supported by resilient volume with Fresh Poultry output averaging 584,000 birds per day, while elevated chicken supply continued to pressure pricing. Restaurant Operations delivered resilient top line momentum with revenue SAR 56 million, up about 30.3% year-over-year, driven by higher transaction volume, both in-store and via aggregators, and continued network expansion with the Popeyes store base increase from 81 to 95, as I mentioned earlier. At the bottom line, the company recorded a net loss of SAR 26 million in Q4 2025 compared to net profit of SAR 30 million in Q4 2024. The year-over-year decline primarily reflects continued pricing pressure in the Agribusiness alongside fixed ramp-up costs and higher financing costs related to the newly commissioned assets during the fourth quarter, as previously mentioned. For the Restaurant Operations, in order to boost transaction volume, brand visibility and penetration, we invested in marketing campaigns and promoted delivery through aggregators. For the full year 2025, gross profit declined 7.7% year-over-year with the gross margin contracting by 270 basis points from 25.5% to 22.8%, reflecting pricing pressure and higher cost levels. EBITDA decreased by 13.1% year-over-year, falling from SAR 361 million to SAR 314 million, with EBITDA margin declining from 14.1% to 11.8%, driven primarily by lower gross profitability and higher operating costs, including ramp-up costs for the newly commissioned asset that I mentioned earlier. In Q4, EBITDA declined to SAR 68 million with a margin of 9.5%, reflecting pricing pressure and the fixed cost profile of assets still in early stage of utilization. Overall, while profitability softened in 2025, improving utilization, ongoing efficiency programs and initiatives are expected to support margin recovery over time. Now let me walk you through the bridge of net income for the full year and for the quarter. The bridge explains the key drivers behind the change in net income for both the full year and the fourth quarter. For the full year 2025, volume and portfolio mix benefited of SAR 90 million along efficiency gains of SAR 130 million. We're more than offset by pricing pressure of an impact of SAR 183 million, higher diesel costs of SAR 58 million, additional depreciation SAR 31 million, and increased financing costs of SAR 44 million associated with newly commissioned assets. The year-on-year net loss also reflects the continued scale-up of restaurant operations with SAR 29 million impact driven by an increase of the number of Popeyes stores. As mentioned earlier, these stores remain at the early stage of maturity where fixed costs and higher aggregator expenses are incurred ahead of reaching optimal revenue levels. Importantly, this impact is scale and cost driven rather than demand driven. On a quarter-over-quarter basis, similar dynamics were observed. Pricing pressure of SAR 50 million, diesel cost of SAR 13 million were partially offset by SAR 37 million of volume and mix of SAR 8 million from efficiency actions. The increase in depreciation in Q4 of the commissioning of the 2 new assets that we mentioned earlier. Now let's talk about working capital and cash flow. Turning to -- cash flow and working capital for 2025 reflected the final phase of our recent investment cycle. Working capital declined during the year with working capital days increasing toward year-end, reflecting the timing impact of ramp-up across newly commissioned assets rather than deterioration in underlying discipline, and we expect normalization as utilization stabilizes. From a cash perspective, the full year 2025 cash balance declined by 30% compared to 2024. This was largely driven by expansion-related investment of SAR 418 million, primarily associated with the commissioning of Majmaah 2 processing plant and the Dahna feed mill. These outflows were partially offset by cash flow from operations of SAR 311 million, an increase in net borrowing. The balance sheet reflects the capacity expansion of new investments we have undertaken over the past few years, which is part of the strategy that we had communicated in the past. This is not unexpected, and we remain confident in our ability to meet both short-term and long-term obligations. As of December 2025, our debt is well balanced across long term of SAR 585 million short-term facilities and SAR 459 million of long term, and lease liability of SAR 689 million, providing funding flexibility through the investment cycle. Liquidity remains stable with a current ratio of 1.1. From a leverage perspective, net debt to EBITDA stands at 5.3x, reflecting the timing of recent capacity additions and the early stage of ramping up the new assets. Importantly, we are already seeing positive momentum entering 2026 across both Agribusiness and Popeyes, driven by decisions and initiatives that commenced in December of last year. With that, I now hand over to Marcos, who will take us through ESG priorities and key takeaways.

Thank you, Fadi. As part of the broad strategy we've discussed today, sustainability remains a core enabler of how we operate, allocate capital and create long-term value. On carbon offset progress, we continue to advance our large-scale planting initiatives with more than 573,000 trees planted across Saudi Arabia since 2021. During the year, we also commissioned our largest water treatment plant in Majmaah 2 with a capacity of 6,000 cubic meters per day. This allows us to reuse water efficiently while supporting additional Moringa tree planting around the site, reinforcing our circular resource model. In parallel, we strengthened our carbon inventory and broader decarbonization strategy. In partnership with Schneider Electric, we completed a comprehensive assessment of our emission footprint. Importantly, we are now developing a comprehensive program to monitor, reduce and report carbon emissions and setting clear measurable carbon reduction targets to guide execution. We also took practical steps to embed sustainability into operations. Through our collaboration with RECYCLEE, we began digitalizing and monetizing waste streams across Popeyes. Used cooking oil and other recyclable materials are now being quantified and sold to recyclers, reducing emission while generating incremental value. Finally, our progress continued to receive external recognition. In 2025, we achieved MSCI ESG rating upgrade for the second consecutive year, while recognized by Forbes Middle East as a sustainability leader, and received the Middle East Technology Excellence Award from Farm Automation in Agritech. Going for our last slide on key takeaways. As we close today, it's important to put our performance and priorities in the context of the broader market environment. The industry is operating a prolonged period of capacity expansion and elevated supply, which has kept pricing under pressure, particularly in the fresh poultry. In this environment, success depends on targeted sustainable growth, disciplined execution, cost control and operational focus. Importantly, the long-term fundamentals of the poultry remain strong with chicken continuing to be the health protein of choice. Against this backdrop, Tanmiah is well positioned. Years of targeted investment have strengthened our asset base and operating platform. Tanmiah brand is a leading brand across channels, delivering high-quality products and receiving multiple awards. Disciplined execution is driving operational excellence and improving unit economics, and this foundation allows us to scale responsibly while protecting long-term profitability even in a such challenging market. Looking ahead, our execution is guided by 4 clear pillars: We remain focused on consumer-led commercial excellence and value-added growth, strengthening and optimizing our core asset base, driving operational excellence, liquidity management, cost optimization and enabling execution through digital capabilities in our people. Together, these priorities position Tanmiah to move from disciplined execution today to sustainable margin-led growth over the medium term with a clear focus on long-term value creation for our shareholders. I thank you, and we are now happy to take your questions further.

[Operator Instructions] We have a couple of questions lined up. First question comes from the line of Nada.

So I have 2 questions from my end. The first one on the Agribusiness, which includes the Animal Feed and Animal Health. So based on my understanding, this segment has a very low net margin. It's barely making money, low single-digit net margin. Nevertheless, if I look at the top line, this segment is pretty volatile. For example, in the first half, this segment reported a growth around 60% on the top line. For better understanding, did this segment in the first half have higher than average net margin and then turned to losses in the second half? I would appreciate your clarification on this. And my second question is on the overall supply situation. Given that you increased your capacity by 34% in the fourth quarter, and I see the volume growth is impressive 18%. And if I'm not mistaken, one of the biggest player also increased the capacity in the fourth quarter. Looking at the revenue per bird for Tanmiah has increased around by 1% on a Q-over-Q basis, which indicates despite the higher volume growth, there is a recovery in the prices. So confirm my understanding on the fourth quarter and what's happening especially on the prices?

So I will address both questions, and I'll let Marcos chime in. So related to the Agribusiness, which obviously includes Animal Feed and Animal Health, we did see pressure in the market in the second half, which is not a surprise, as the entire poultry business struggled in the second half of the year. So yes, we did see margin compression from that segment. But we are seeing, now at the tail end of the year, around December, we are still seeing improvement in that segment because of the demand on the Animal Health and the Feed segment side. Regarding building the capacity, obviously, it's not a surprise. It's part of our strategy to build those capacity and to run a hybrid approach asset model. So we did deliver what we said we will deliver in terms of expansion in alignment with Vision 2030 to build a sustainable platform and supply in the local market. Our target is not changing. The fundamentals of the local market, as mentioned by Marcos, are still strong. The demand is there. It's just a matter of how we can really optimize those assets and run them at the capacity level that we need to achieve to get the efficiency levels expected. I'll open it to Marcos to add anything.

I think just to complement, Nada, that indeed, as Fadi mentioned, the first half was quite challenged. Let's say, we really put our efficiency and go-to-market into play in the first half. And even though we saw several players suffering, we managed to implement all those. On the second half, we felt, let's say, the challenging scenarios in terms of increased volumes from local production and imports. And I think, as Fadi mentioned, we have a very important event happening, which is the Saudi G.A.P. that is coming to be implemented by mid-March and is already being under implementation for the last 6 months, which will tackle exactly this part of the higher imports. So we are seeing, of course, already this program being implemented and the government really working closely to the situation in the market.

Next question?

Yes. Just if you allow me for a follow-up.

Yes, Nada.

Yes. So just to confirm, for the Animal Feed and Animal Health, did you [ record ] losses in the second half or not?

For the second half? Typically, we don't disclose this information, but we, I would say, kind of awash in the second half.

And lastly, just to confirm, the capacity you're standing at now is 795,000 birds per day, right?

I'm sorry?

Just to confirm the capacity is 795,000 per day, right?

Yes, that's the engineered capacity, and we are utilizing those assets as we speak. We do have the program built by week for 2026. Let's allow others to ask questions and limit questions to one if we could, so we can at least cover the rest, and we do have one-on-one already scheduled.

So the next question comes from the line of Abdullah.

I have one question from my side. This is Abdullah Alsalamah from SAB Invest. My question is regarding the Restaurant segment. So despite the easing in the poultry prices and slower expansion of Popeyes in 2025, unlike other QSR operators that benefited from the lower poultry prices, losses have widened actually for Popeyes. So what are the reasons for such a deterioration?

When you look at a couple of things, you have a lot of the new stores that are still at the early stage of attracting customers, penetrating our competition areas, coupled with aggregator costs rising from 50% to 57%. And these were already planned in our financials. We're also investing in advertisement. So there is a lot of kind of upfront investment, which those costs are fixed. They were not offset from a top line growth. We are seeing, though, as mentioned by Marcos, as we started implementing a lot of these actions in December onward, we are seeing significant improvement in our top line in January, February as we speak. And that's because we are changing the menu. We are changing how we do our offering, more of value meals, more of localized Saudi-first mind, more of also looking at the team that execute that business. We did have also a change in management, which provides a lot of confidence behind how we are driving this from a localized mindset.

Okay. And did Popeyes benefit from the poultry prices or not?

The prices prevailed the same, because we do use our fresh Tanmiah poultry, which obviously, it's kind of from an end-to-end fully integrated. It does provide benefits to the Popeyes business compared to other QSR, who use frozen, which impacts the experience, impacts the taste.

We have a question from the line of Abdullah Al Buraidi.

This is Abdullah Al Buraidi from Emirates NBD Capital KSA. So when we look at the full year results, we noticed that, as you mentioned, the volume for the year has increased by 12.4%, while revenue has only increased by 1.3% for the Agribusiness. So this gives us a price impact of a 10% decline. Could you clarify the price impact on the fourth quarter, either percentage-wise or real wise? I understand that it is shown on the chart of SAR 50 million, but as an easier way to calculate it?

I think Abdullah, I'll take, and then Fadi can also complement. Yes, the decline is similar to what you have mentioned. I think if you have seen the frozen decline, frozen prices decline, it was even higher than that. And I think here, Abdullah, came into play our go-to-market and diversification that we've been doing for the last 3 years, where we have increased a lot our fresh distribution, which in that period gave us better realization. But still, we face that because as the gap of fresh and frozen became bigger, you had consumers migrating to frozen and the fresh putting under pressure. So the fresh had to follow the promotional calendar and bring some promotions. So we did manage through several multichannels that we have the better realization, avoiding to push one channel and another. But it's still, as you mentioned, we faced that on the poultry segment, which we are seeing an important recovery going on now and our go-to-market further positioning us in a better situation. But we did face that. And this is what we mentioned, Abdullah, was what we faced in the second half. This was prevailing across second half. We have seen this reach, but we believe we reached the bottom and now we are in a, let's say, price recovering mode.

So would you say that the prices in current year, the first 45 days of the year is better than what have been prevailing in the fourth quarter?

Look Abdullah, you know we cannot give so much forward messages. But indeed, we are. And I think you saw the new products we have launched. We launched also this new line of branded items, which I really suggest you also try. It's fantastic products and we are having a very good sellout on them. Everything you're putting on the shelves is moving very fast. So all those new products we are adding, and when we are talking here, we are talking about more than 90 products being launched, they all go helping in building blocks on this, and we are seeing this really happening in the last 45 days.

Okay. Just one last question. You've mentioned Saudi G.A.P. What do you mean by that? And what would that imply on your business?

Sure. I'll give you the details. So back in mid-September, the government established a new program called Saudi G.A.P., good agricultural practices. And this we have been certified for this new program with our local production. So we have done that. Even in our products, you can see there, we have the Saudi G.A.P. logo, which is, let's say, the confirmation from the government in all the good quality and practices you have in the market. But the imported chicken didn't go through this program before. And this program in September was launched for the imported chicken that comes to Saudi from multiple countries, coming from Brazil, from Ukraine, from Russia, from Poland, from France, from Argentina. So all those exporting countries now, they need to adhere to this program, and they need to be certified, meaning by that, the Saudi authorities will visit those countries. We will check a list of points in terms of quality, in terms of adherence to agricultural practices from feed to farm to farm equipment. And this is going to be implemented from mid-March. So this is a very important movement from the government to strengthen, let's say, the quality and impact the imports, the ability for some players to import that do not have adherence to the program or are not certified. So it's a very important event and it's coming into place now in March. So some players that probably were not able to fulfill all the points of the program, they might not be able to export again to Saudi Arabia. So that's a major impact, Abdullah.

Our next question comes from the line of Mohammed Alrasheed.

Just one question from my side. Has there been a change in your definition of capacity during this quarter, because there was a massive increase in your reported capacity number in this quarter compared to last quarter. And you mentioned that this is the current engineered capacity. So if you can please shed some more light?

As we mentioned earlier, we did commission 2 new assets in Q4. So obviously, as those assets become available, baseline would increase. That's the main reason. No change in how we calculate it compared to -- if that's what you're interested to know.

Okay. So the 790,000 birds is operational in a sense?

Yes. So as we ramp up the production, get first shift, second shift, that type of things, we could achieve that number of birds per day, yes.

The next question comes from Jawaher.

I just have a question on your capacity expansion plans. So given that the current market conditions and the fact that other players are also expanding capacity, what gives you confidence that the market can absorb this additional supply? Are you like expecting to replace the imported volumes? Or is the growth mainly coming from the domestic consumption? And if you can also share some data on the current supply and demand balance.

Okay. I will start with that, and then Fadi can also complement. So Jawaher, the consumption is increasing in Saudi Arabia. We saw across channels a consumption increase. So we were requested -- along the year, until we got the new assets, we were almost with 100% utilization. And if I had more birds, I would have been able to supply them. So of course, the situation you have between supply and demand can be balanced by the imports reduction. And I think this is the whole government target for the self-sufficiency and import reduction. Therefore, Saudi G.A.P. is the closer look for the government in terms of data for understanding the offer and demand. So we are very confident on the government's ability to have all the data and understanding the situation and protecting here the local investments done by all the companies. We are very, let's say, positive on the further outcome, and we are, of course, growing our production as the new assets are becoming available. As Fadi mentioned, we have the new assets also coming in the next 2, 3 months with the mega hatchery, the mega feed mill, which will further help us to debottleneck all the value chains to continue to grow. But for sure, that supply/demand is something we're monitoring constantly, and we are very confident the government is monitoring as well.

And just to add to that, Jawaher, when you look at the consistency or lack of for some of the local players as well, it is a journey that will take time, whether it's driven by operational issues, mortality or commercial execution. That's already in the play as well, and it will take time for -- even if they build more capacity, the markets still absorb that volume.

That's clear. And where do we stand in terms of the capacity pipeline? Are we still planning to reach our initial target of 1 million birds per day? Or is it delayed for now? Where do we stand in terms of that?

We are working on that same calendar. There is no change in our strategy. Just to give you a sneak peek behind the current view. For 2026, we have, I guess, full schedule in terms of coming up with the existing facility that it's, whether it's 60%, 70% complete, to get them completed, commissioned and ramped up during 2026. So that's our focus. And we will turn the page in 2027 [Foreign Language] with that in mind to accelerate to that 1 million.

Just one complementing point, Jawaher, to what Fadi mentioned. We also have farms being built at this stage, as you know, in the 100 farms program with the Chinese funding. So I think all that value chain, let's say, capacities that come into place, we continue our journey. We do believe on our capacity to supply the market and the demand is there. It's consistent. So we continue our plan.

Next question comes from Tanmay.

I just wanted to understand by when can we expect the Restaurant Operations to turn profitable? Like is that by 2026 or '27, when can we expect that?

So the year of 2026 is the year of how we can really get more stabilized recovery. We expect at EBITDA level to reach that by Q4. At net profit level will be 2027. And that's a lot of actions that we -- we are seeing actually those actions delivering good results in the first 45 days as we speak. So whatever we are doing, it's working, and we are confident in that business, and we continue to support it.

We have a question from the line of Ingy.

My question is about pricing in 2026. How volatile do you see the prices during this year? And when do you expect the market to balance in terms of supply and demand?

I think we had a question earlier, right?

Just to complement, as we mentioned, we're seeing the year starting in a better tone. The last year, we faced that imbalance between offer and demand. We saw also some players having difficulty as avian flu was spread in Europe and other countries, which momentarily impacted some volumes being exported here. Still, there was a stock, but we see the consumption very -- started the year very strong. And I think you can see by the traffic we see in Riyadh nowadays, it's a lot of people there. So consumption is fast, strong. We are seeing that from all channels between retail and food service. So we are confident that the Saudi G.A.P. will be an important step because that will impact the ability for any exporter to export here, but only the ones that follow really the program will be able. So we are seeing an important impact. So we are positive on the outlook.

So in terms of Saudi G.A.P., so how much volume do you expect to be reduced from the imports? And do you have a rough estimate like 10% of imports or 20%? Do you have an estimated figure in mind?

Ingy, we have, but it's difficult for me to voice them to you. Of course, we analyze player by player, volume by volume, SKU by SKU that is coming here. But considering the big volumes that comes from import, we consider it will be a significant impact. I cannot predict to you. It all depends on the investment that each exporting producer will do, because they need to do a lot of investments to adequate their farms to the program, as well the ability to pay for the visits and do that on time. I cannot predict to you here exactly. We will see that coming soon, because that program is starting only from mid-March, only certified exporters will be able to bring here. And we will see that coming up in the next few.

The impact will vary by country, right?

Yes.

So the percentage of the uncertified -- in order to see -- because 2025 was indeed a very rough year for poultry players in Saudi market. And prices went down significantly. So what's the breakeven price in order to estimate 2026 numbers. Can we expect that this year, there will be a recovery in the Agribusiness, excluding Popeyes, because you mentioned that this year, maybe it will be positive on the EBITDA level. But for the Poultry segment, can we expect the market to recover in terms of pricing and to balance, and this oversupply will vanish this year? Or can we expect it by 2027 or 2028?

We are working on the controllables, right? So we are trying to control our operational excellence and our commercial excellence, as mentioned by Marcos on how we execute. Now there is always, in any market -- I came from the protein industry myself, and I've seen cycles like this. I've seen worse cycles than that. This is not like the worst that you could see in this type of business. Sometimes those cycles stay gloomy for a couple of years, but we are seeing actually improvement. The fundamentals are still strong. We do believe in the local market and with the GCC market on where we exist, and we continue to serve our customers and consumers better. So that's how I see it.

I fully agree. That's it. Is it clear?

In 2026, do you expect the numbers to recover from the losses that we saw in 2025. So in 2026, is there guidance for your earnings?

We don't give the guidance, but we really believe on the steps the government is doing. So I think this is unprecedented program, Saudi G.A.P. I think a few people understand the dimension of that, and I think the impact this can have. So we're really confident on that. And we are working hard, as we mentioned and Fadi mentioned, on our go-to-market. I think we can work on what we can control and do the best go-to-market. We tend to sell better that we can with the maximum profitability. But we are confident on those steps from the government.

We got maybe 1.5 minutes for maybe one last question.

Yes, sure. We have a follow-up question from Jawaher.

Yes, I have a follow-up question on the capacity. So you've reached to 794,000 birds per day as of the fourth quarter. I just want to understand if the upstream, let's say, supply chain operations such as the breeder, hatchery and broiler farms are scaled and aligned with basically to support the volume. I don't know if you can share like the current utilization rates across the breeder and broiler farms? So basically, what I'm trying to understand is basically if these operations are all aligned?

You probably missed that part when I mentioned scalability of those assets and the calendar that we are working on week by week. We do have a schedule week by week, by farm, by the fully end-to-end cycle of poultry on when those assets will be ready to trigger the production, right? And that's all what we're going to work on in 2026 to deliver our commitment, because those commitments are important to serve our customers and our consumers better.

Thank you, Management. I believe we are at the end of our designated time. If the management would like to make any concluding remarks?

Yes. Thank you for your interest in Tanmiah. And as mentioned by Marcos, our focus will remain on customer-led commercial excellence, value-added growth, strengthening and optimizing our core asset base, driving operational excellence across the network, liquidity management, cost optimization, and enabling execution through digital capabilities and our people. That's our focus. And we thank you for your time, and thank you for your interest in Tanmiah Foods. Have a wonderful day.

Thank you, management. Thank you, attendees. The meeting will now come to an end.