MEPCO forays into tissue paper production to diversify portfolio: CEO

Middle East Paper Co.’s (MEPCO) approach towards tissue paper production falls within its strategic plan to expand operating model and diversify paper products, chief executive officer Sami Ali Al Safran told Argaam.

The company’s strategic plan envisions movement in vertical and horizontal directions, Al Safran said in a phone interview.

The firm’s hygienic paper jumbo rolls production plant, which was approved recently by the board, will have an annual capacity of 60,000 tons, targeting mainly the local market.

He further clarified that the imported portion accounts for the largest proportion of locally consumed raw tissue rolls.

"The implementation of MEPCO’s plan is based on managers and technicians’ experiences, who have previous experience in the cardboard industry," the CEO said.

He pointed out that the jumbo rolls production plant will be funded by several parties, most notably the Saudi Industrial Development Fund (SIDF).

As on Sept. 30, 2020, MEPCO’s loans amounted to SAR 590 million, while the total shareholders' equity reached SAR 747 million. Thus, the shareholder equity ratio is low and enables the firm to finance growth operations by borrowing, Al Safran said.

He indicated that the company's annual production capacity is currently about 500,000 tons, accounting for 50% of the local market needs, adding that it does not have a market share in the tissue paper rolls currently.

Last week, the board of directors approved the establishment of tissue paper and hygienic paper jumbo rolls production plant at an estimated cost of SAR 338 million, according to data compiled by Argaam.