Aslak posts highest quarterly net profit since 2015, expects positive performance in Q2 2022: CEO

Nabil Alamir, CEO of Aslak

United Wire Factories Co. (Aslak) reported improved selling margins for the first quarter of 2022, leading the company to record the highest quarterly profit since 2015, CEO Nabil Alamir told Argaam in a phone interview.

Sales jumped nearly 32% year-on-year in Q1 2021, Alamir noted, adding that selling margins improved, thanks to excellent market prices that contributed to significantly absorbing fixed costs.

Aslak is on an “upward curve” following a decline in sales and revenue to the minimum limit in 2018.

Speaking of the Russian-Ukrainian war, Alamir said that Aslak secures raw materials from domestic sources, namely Saudi Iron and Steel Co. (Hadeed), an affiliate of SABIC. The war impacted supply, while prices of alternatives went higher.

Production inputs, such as zinc, hit unprecedented levels and are still on the rise. This in turn affected the cost of production inputs and had a direct impact on selling prices, in addition to supply chain disruptions. Demand increased amid expectations and customers’ caution in order to avoid any future hikes, Alamir explained.
 

Elsewhere, the top executive elaborated that the construction sector performance was still weak, as evidenced by sales volumes, cement sales, and financing size for retail customers in the residential and real estate sector, which witnessed a decline compared to Q1 2021.
 

“The sector has started to see momentum, in light of mega projects such as The Red Sea and Qiddiya. The government projects signal positive for the sector,” Alamir added.
 

On extending the memorandum of understanding (MoU) signed for potential stake acquisition in Thamar Nutrition and Subsistence Co., he said: “Overall, the situation is positive, and we are in process of completing the required due diligence. Aslak is keen to ensure that all is well, as this marks the first investment by the company outside the sector.”
 

Speaking of Aslak’s MoU to acquire a stake in A-1 Fence Arabia for industry, Alamir explained that the company has global potentials with regard to security fences. Aslak signed an MoU in light of the expected demand by many establishments and vital facilities of major companies.
 

Meanwhile, demand is high. This sector complements the company’s operations. This business will have a bright future in terms of the expected size of operations going forward.
 

Alamir added that Aslak expects robust performance in the second quarter of the year, backed by economic conditions, the summer holiday, and the positive momentum in mega projects during the second and third quarters in the building and construction sectors. The diversified activities of the company allows it to take advantage of a limited impact of seasonality factors.

Aslak reported a 61% rise in Q1 2022 net profit to SAR 26 million, from SAR 16.1 million in the year-earlier period, Argaam reported.