Jubail plant’s operation, higher prices, volumes give boost to revenues, says BCI CEO

Ala AlShaikh, CEO of Basic Chemical Industries

Ala AlShaikh, Chief Executive Officer of Basic Chemical Industries (BCI), said that there has been an improvement in prices and quantities sold in all segments, particularly chlorine, caustic soda and their derivatives.

Moreover, the operation of Jubail plant contributed to the strong increase in the company's revenues and profitability from its wholly-owned companies, he told Argaam in a phone call.

The CEO said that the improvement in sales and profits came despite pressure on profit margins due to the high prices of some raw materials imported by subsidiaries.

The overall demand was strong during the third quarter of 2022, although relatively lower than the first and second quarters, with some pressure on selling prices after mid-year, AlShaikh added.

The plant for chlorine and caustic soda products operated at 93% of its design capacity. The factory's products represented 54% of the total sales of the companies, which are wholly owned by the group, and 22% of the total sales of the group. Exports reached 7% of the total production of the plant during Q3 2022, the CEO noted.

Meanwhile, he predicted the continuation of some pressures on prices, which will, in turn, put pressure on profitability. However, the company will work to reduce the impact of this by increasing the quantities sold of chlorine products, caustic soda and hydrochloric acid in the basic chemicals unit to absorb the new depreciation cost of the Jubail plant, as well as accelerate export to some target markets.

BCI’s outstanding loans stand at SAR 397 million, 50% of which will be used to finance the Jubail Industrial City’s plant, while the remaining was self-financed from the company's profits. These loans represent only 53% of the wholly-owned companies’ equity, the CEO indicated.

The high cost of financing will cut the company’s profitability in the near term; therefore, it is currently working to study these variable data on the cost of financing and take necessary measures to mitigate its impact on the sustainability of the company's profitability, AlShaikh said.

According to the data available in Argaam, BCI profits increased to SAR 48.1 million by the end of the first nine months of 2022, compared to SAR 20.6 million achieved during the same period in 2021. Q3 2022 profit stood at SAR 17.7 million.