Advanced Q1 profit weighed by 41% rise in feedstock prices: Al-Mulhem

Khalifa Al-Mulhem, Chairman of Advanced Petrochemical Co.

Khalifa Al-Mulhem, Chairman of Advanced Petrochemical Co., said that feedstock prices rose by 41% in the first quarter, while product prices did not rise by the same percentage, which weighed on profits of the three-month period.
 

In a statement to Argaam, the top official said that the increase in shipping costs was about 200% due to the shutdown in China and the accumulation of containers in its ports, which led to a shortage of containers and a spike in prices globally.
 

SK Advanced incurred losses of about SAR 12 million in the first quarter due to the increase in feedstock prices and unavailability of polypropylene product, compared to SAR 18 million profit in the year-ago period, said Al-Mulhem.
 

He added that sales volume increased by 35% due to the absence of a scheduled shutdown of the company's factories.
 

The prices of products at the end of Q1 amounted to $1,440 per ton, compared to $1,250 per ton in the same quarter of last year, he noted.
 

The chairman also stated that the company's total sales in the Turkish and European markets represented 60% of total sales, driven by the high prices, while Pakistan accounted for 11%, inside the Kingdom 7%, Bangladesh 6%, while China accounted for a small percentage of total sales.
 

He explained that the capital increase came to strengthen the company's financial position and boost its capital base to keep pace with the expansions, including the new factory in Jubail, which requires the company to have better financial solvency.

This necessitated transferring part of retained earnings to capital, in addition to fulfilling the requirements of banks to finance these projects.
 

The top official said that it is difficult to predict the expected performance in Q2 2022, due to the many changes and the lack of clarity of vision regarding gas and shipping prices, noting that that there will likely be an increase in feedstock prices.
 

Advanced earlier posted a 4% decline in net profit to SAR 164 million for Q1 2022, compared to SAR 171 million in the same period a year earlier.