Saudi Paper’s Q2 2022 sales hit by supply chain problems, positive performance seen in Q3: CEO

Yousseri El Bishry, CEO of Saudi Paper Manufacturing Co. (SPM)

Saudi Paper Manufacturing Co.’s (SPM) sales were battered by global supply chain problems in the second quarter of the year, dropping 25%, CEO Yousseri El Bishry told Argaam.
 

The rise in the second-quarter earnings to SAR 21 million from SAR 15 million in Q1 2021 was driven by increased sales and the sale of one of the company’s assets, the CEO said, explaining that provisions of SAR 3.2 million were allocated due to client defaults, which further curbed SPM’s profit growth.
 

The company’s exports hit nearly SAR 10.4 million in Q2 2022.
 

Moreover, demand for paper and its derivatives in the second quarter remains high. There is also growing demand for SPM’s products, which drove it to buy new production lines to meet the market needs.
 

Meanwhile, the prices of paper pulp and raw materials witnessed a constant increase during the second quarter, due to higher global inflation rates and the shortage of pulp in global markets, El Bishry noted, adding that the company adopts the policy of maintaining profit margins by keeping prices in parallel with purchasing costs to maintain its profitability.
 

Replying to a question about SPM’s pulp inventory, the CEO said that it hit up to SAR 6 million. SPM entered into an agreements with major pulp suppliers and manufacturers to buy large amounts of pulp. It opened letters of credit worth SAR 112 million and has started to receive this product since the beginning of this month.
 

Elsewhere, El Bishry expected SPM’s products to maintain the current level during Q3 2022, adding that there is no reason for any change. The Saudi paper manufacturer succeeded for the fourteenth consecutive quarter in reporting positive results. He also expected the robust performance to remain in the third quarter, based on the current signals.
 

SPM’s net profit after Zakat and tax rose 18% to SAR 34.4 million in H1 2022, from SAR 29.2 million in the prior-year period.  The second-quarter net profit after Zakat and tax climbed 39% to SAR 21.1 million, compared to SAR 15.1 million in Q2 2021.