Saudi Paper posts robust results in Q1 2022, expects high demand to continue in Q2: CEO

Saudi Paper Manufacturing Co. CEO Yousseri Elbishry

Saudi Paper Manufacturing Co. (SPM) reported a robust set of results for the first quarter of 2022, amid global supply chain challenges and higher inflation rates, CEO Yousseri Elbishry told Argaam in a phone interview.

The global supply chain crisis increased the cost of raw materials, as the cost of pulp paper and packaging materials jumped 60% and 25% year-on-year, respectively.

Supply is low amid an ongoing supply chain, while local and global suppliers are unable to meet the agreed deadlines. Demand for products is witnessing a remarkable rise, as sales grew by 23%. Orders were steady by the end of the first quarter of the year, and production was fully covered by customer orders, Elbishry said, expecting high demand to remain in the second quarter of 2022.
 

SPM’s exports are estimated at SAR 20 million - almost similar to the previous quarter’s level – which account for 10% of sales.

On the other hand, he explained that the company financed working capital by SAR 36 million to build strategic stock of pulp to ensure operational continuity. The Tadawul-listed company also purchased a new paper production line to ramp up its production capacity by 32%, to slash production costs per ton and strengthen its geographical reach across the region.

The production capacity of Kuwait-based Al-Juthoor Paper Tissue Manufacturing Plant increased by 4,200 tons annually to 10,200 tons annually on expansion. The plant contributed 2% to the company’s first-quarter net profit, Elbishry added, expecting this contribution to double, based on a gradual increase in capacity.

The company’s provisions stood at nearly SAR 153 million, represented by customer debts, inventory provisions, end-of-service provisions, etc.

The company’s Q1 2022 net profit dropped to SAR 133 million, from SAR 14.1 million in the prior-year period, Argaam reported.