MEPCO to see stable performance in Q4, strong demand continues: CEO

Sami Al-Safran, CEO of Middle East Paper Co. (MEPCO)

Middle East Paper Co.’s (MEPCO) performance is expected to stabilize in Q4 2023, while maintaining the current paper packaging segment’s sales volume, CEO Sami Al Safran told Argaam.

He noted that the increase in the operating rate and robust sales volume of associate Juthor Paper Manufacturing Co. will contribute to boosting MEPCO’s sales revenues.

Commenting on Q3 2023 financial results, Al Safran said the company’s sales of paper packaging products continue to witness stability amid strong demand for MEPCO’s high-quality paper products.

He indicated that MEPCO's sales grew by 9% year-on-year (YoY) in Q3 2023, despite the current economic and political conditions worldwide, which affected the global demand for paper packaging.

The local markets are the most sought-after for such products, still enjoying a healthy demand, the CEO further stated.

The decline in global prices is slowing, as MEPCO witnessed a 21% increase in gross sales revenues on a quarterly basis. This was due to the growth in local demand for the paper packaging segment after the national holidays.

The cost of sales surged in the third quarter of this year by 23% quarter-on-quarter (QoQ) due to the higher cost of maintenance at the company’s factory, the CEO said. He indicated that this one-off cost has a prominent importance in maintaining the operational capacity and efficiency of MEPCO’s production process.

The current economic conditions affected the decline in global selling prices for paper packaging. However, MEPCO still maintains its market leadership and quality products.

This contributed to boosting the company’s sales volumes, hence sales revenues from tissue paper increased to SAR 38 million at Juthor’s production plant.

Regarding the revaluation of financial assets, Al Safran said MEPCO seeks to manage its working capital to maintain the liquidity needed for operations, inspite of the current circumstances and higher interest rates.

Since the beginning of 2023, MEPCO relied on a policy of managing the inventory turnover and continued to provide facilities to customers, in line with the approved credit policy, and meet due payments.

MEPCO swung to a net loss of SAR44.6 million, after minority interest, in the first nine months of 2023, against a net profit of SAR 244.9 million a year earlier. The third-quarter losses reached SAR17.8 million, Argaam reported.