Zahrat Al Waha expects pent-up demand in H1 2021, repays all bank liabilities in 2020: chairman

Ahmed Al Theyab, Chairman of Zahrat Al Waha 

Zahrat Al Waha Trading Co. expects the demand for its products to rise between 5% and 7% in the first half of 2021, amid a potential improvement in economic and market conditions, compared to the year-earlier period, chairman Ahmed Al Theyab told Argaam in an exclusive.

Production in the second half of 2020 hit 43,000 tons, compared to 46,000 tons in the second half of 2019 and 45,000 tons in the first half of 2020.

Sales volumes in the second half of 2020 reached 41,000 tons, compared to 45,000 tons in the first half of 2019 and 45,000 tons in the first half of 2020, Al Theyab explained.

The chairman expects better sales in Q1 2021, on the back of demand recovery in both local and global markets.

Commenting on changes to raw material prices, Al Theyab said that the raw materials used by the company are petroleum derivatives, whose prices are correlated to oil prices.

“We expect raw material prices to increase in the first half of 2021, compared to the previous year,” he said, noting that a rise in raw material prices contributes to an increase in the sales revenue, which, in turn, boosts profit.

Zahrat Al Waha boasts a professional team in supply and inventory management to limit price fluctuations and provide the necessary requirements for production, amid the optimum utilization of a storage area to build a sufficient stock throughout the year. Accordingly, Zahrat Al Waha depends on a fixed pricing policy.

Asked about the rise in the company’s market capitalization by over 70% in the past six months, Al Theyab said that the company’s ability to maintain its solvency and market share helps it achieve its objectives.

Zahrat Al Waha financed over 90% of all capital expansions, particularly the expansions in the construction of production lines through its cash resources, Al Theyab affirmed, concluding that the company fulfilled all bank liabilities in 2020.

The company’s 2020 net profit fell to SAR 40.6 million from SAR 56.6 million in 2019, Argaam reported.