Sipchem starts reaping merger fruit, expects product demand to remain higher until Q1 2022: CEO

Abdullah al-Saadoon, CEO of Sipchem

Abdullah al-Saadoon, CEO of Sahara International Petrochemical Co. (Sipchem), expected demand for the company’s products to remain strong in the fourth quarter of the year and the first three months of 2022.

Sipchem disclosed historical results, driven by higher prices of the company’s products, such as methanol and butanediol, among other factors, Al-Saadoon told CNBC Arabia.

The robust profit was also fueled by a high level of integration in the production chain of Sipchem’s plants, which boosts the value added and competitiveness of products. Additionally, the merger has started to pay off in the third quarter, as general and administrative expenses fell by 40%. Finance costs also dropped nearly 24%, Al-Saadoon noted, expecting its benefits to show in the fourth quarter of the year.
 

Moreover, Sipchem’s strong marketing plan helped buoy its third-quarter earnings. The company has strong presence in the European and Asian markets, through Sipchem Europe and Sipchem Asia. It markets more than 70% of its products to end consumers.

Replying to a question about the company’s debt, Al-Saadoon added that the company sought to reduce its debt since the beginning of the year. It reduced its leverage by almost 12% to reach 40% of capital, he added.

Sipchem turned to a net profit after Zakat and tax of SAR 2.270 billion for the first nine months of 2021, against a net loss after Zakat and tax of SAR 141.8 million a year earlier. In Q3 2021, net profit after Zakat and tax skyrocketed to SAR 1.029 billion from SAR 10 million in a year earlier, Argaam reported.

Sipchem stock also rose its daily limit today, Oct. 20, to close at SAR 46.95 – the highest level since debut on the Saudi Exchange (Tadawul).