MEPCO achieves record production, sales in 2020; operating rates exceed 92%: CEO

MEPCO CEO Sami Ali Al Safran

Middle East Paper Co.’s (MEPCO) results for 2020 reflected the company's ability to overcome major challenges, as it achieved record levels of production and sales, chief executive officer (CEO) Sami Ali Al Safran said.

Commenting on MEPCO’s Q4 2020 results, he added that the company was able to efficiently reduce direct production cost, through implementing several operational initiatives in the second half of 2020.

The company's operating rates exceeded 92% to meet the surprise increase in demand in H1 2020, he said, adding that the global operating rates for comparable firms declined from an average of 86% to less than 82% in 2020 due to the coronavirus repercussions.

MEPCO’s chief financial officer (CFO), Mohammed Saleh Ali Darwish, said that the company had the opportunity to realize gains in direct and indirect costs. This was the beginning of a series of initiatives that will enhance MEPCO’s profitability in the future, the CFO added. "Since the beginning of Q4 2020, MEPCO is witnessing a sharp rise in raw materials prices, which led to slightly lower gross margins by 2020-end," he said.

However, the company's profitability before deducting the debt and Zakat expenses showed a distinct growth as a result of the operational efficiency initiatives. MEPCO was able to reduce the debt-to-equity (D/E) ratio to 0.77 and net D/E to 0.71.

He pointed out that the company’s liquidity and cash flows have improved, allowing to comfortably meet all debt payments, which will support growth in the next three years.

According to data compiled by Argaam, MEPCO posted a net profit after Zakat and tax of SAR 20.2 million in 2020, compared to SAR 6.1 million in 2019.