Aslak’s product mix helps maintain market share, achieve ultimate profitability: CEO

Aslak’s CEO Nabil Alamir

United Wire Factories Co.’s (Aslak) product diversification enabled the company’s resilience against market changes and helped it achieve the ultimate profitability while maintaining its market share, said CEO Nabil Alamir.

In a phone call with Argaam, the top executive indicated that Aslak is currently working on completing the manufacturing facilities for its new products in preparation for their market rollout.

He added that Aslak has established a new factory in Al-Kharj Industrial City on an area of 15,000 square meters, which will be allocated to quality products that suit the current and future needs of the construction sector, especially the Saudi Vision 2030 projects.

The CEO attributed the decline in Q3 2023 profit to lower sales value and margins as a result of price competition among producers due to the generally weak demand for all products, especially construction products. Prices of raw materials and rebar also continued to slump, which led to sales losses due to the presence of inventory priced two times higher because of the pressure on selling margins.

Thus, Aslak worked to mitigate this pullback as of early Q2 2023 by taking rapid and fundamental measures. This is to offset the factors with the greatest negative impact and manage purchases of raw materials and stock placement during the second and third quarters of this year in a cautious and effective manner, he stated.

The company has counteracted this stage, which is evident in the surge of the gross profit percentage to 8% in Q3 2023, compared to 6% in Q3 2022, despite the decline in sales. Measures to deal with the current situation will remain adopted until market conditions improve, according to Alamir.

He pointed out that, although sales slumped, Aslak benefited from production capacity at appropriate levels to absorb fixed costs and alleviate their impact on profit margins. This is besides placing more focus on civil sector products in order to garner the most out of these safeguard measures, in line with the company’s strategic plan.

Alamir also highlighted that it is currently difficult to predict market trends in light of the prevailing political and economic fluctuations, adding that demand for the construction sector products is likely to continue until year-end.

"Margins, in general, have improved as a result of the stability and consistency of raw material prices at local levels. We always work to track these variables on a regular basis to deal with them in an effort to achieve the ultimate results," said the CEO.

According to Argaam’s data, Aslak's profit fell to SAR 12.1 million in the first nine months of 2023, compared to SAR 45.3 million in the same period a year ago.