A company can succeed in selling more while leaving an important question unanswered: how much does it retain from each additional riyal of revenue? Reading a business success story through that question is more useful than stopping at a product photograph or a sales headline. An annual report becomes a learning resource, rather than a ready-made strategy for a business with different products, funding and operating conditions.
Growth in money, a different movement in the ratio
Almarai's statement of profit or loss reports approximately SAR 22.065 billion of revenue in 2025, against SAR 20.980 billion in 2024. Gross profit increased from approximately SAR 6.664 billion to SAR 6.888 billion. Dividing gross profit by revenue using the unrounded statement figures gives margins of about 31.76% and 31.22%, respectively. These percentages are our calculations, not additional company disclosures.
The lesson is to separate the amount of profit from the proportion retained. Two line items cannot establish why a business changed, whether a particular investment worked, or which operational decision should be copied. Those questions require further evidence about products, markets, costs and the accompanying financial notes.
A fictional retailer makes the distinction tangible
Leave the company's figures aside and consider an invented retailer. In its first month, sales are SAR 100,000 and cost of sales is SAR 70,000. Gross profit is SAR 30,000, producing a 30% margin. In the following month, sales reach SAR 110,000 while cost of sales reaches SAR 79,000. Gross profit becomes SAR 31,000, but the margin falls to approximately 28.18%.
The retailer earned another SAR 1,000 at the gross-profit level, requiring another SAR 10,000 of sales to do so. That does not automatically make the decision poor. A product launch or a dependable source of repeat orders might justify it. Management still needs to understand whether the change is temporary, which additional expenses sit below gross profit, and when the sales will turn into cash.
This example excludes taxes and other expenses. It is not an Almarai outlet, a company forecast or a case reported by Almarai.
Separate four possible explanations
- Net selling prices: did discounts, rebates or returns reduce the amount earned per unit? A displayed price is not enough.
- Unit costs: examine the purchase or production cost of the units sold, not total purchases that may include unsold stock.
- Product mix: a larger share of lower-margin products can reduce the overall margin even when each product's margin is unchanged.
- Measurement: check missing cost invoices, recognition dates and returns before treating incomplete records as commercial improvement.
Start with the products that matter most. Prepare a two-period comparison showing units sold, net revenue, cost and gross profit for each. Reconcile the total to the accounts before debating performance. A detailed report that disagrees with the ledger first raises a data question, not a pricing conclusion.
Bring an explanation to the sales meeting
Avoid turning the meeting into automatic criticism of a lower margin or automatic praise for higher sales. Ask for a testable explanation: which part came from volume, which from price or cost, and which from the mix? Assign an action, an owner and a measure that can show whether the next comparison has improved.
The action could be renegotiating freight, ending an uneconomic discount, or accepting a lower margin on a product with a demonstrable benefit to the wider portfolio. The decision must fit the business's evidence. Matching a large company's percentage is not the objective; improving the quality of the question is.
This is independent educational analysis, not investment advice or a company valuation. It implies no commercial relationship with Almarai and makes no claim that Almarai uses Wali products. The numerical source is the consolidated statement of profit or loss in Almarai's 2025 annual report, linked in the article sources.
Sources & further reading
Visit the original source to explore the concept and its wider context.
General educational content. Appropriate treatment depends on your business and accounting policies; consult your accounting professional when applying it to business records.
