Higher product prices to boost Tasnee’s Q1 results: CEO

National Industrialization Co. (Tasnee) expects to see a positive impact on first-quarter results from higher product prices, CEO Mutlaq Al-Morished told CNBC.

“Tasnee has robust liquidity and can fulfill its financial liabilities,” Al-Morished said, noting that the Saudi company has paid off SAR 4 billion in loans, narrowing its debt from SAR 24 billion to a current SAR 20 billion.

The sale of Cristal to Tronox will help the Saudi company restructure and reduce its debt further to SAR 12 billion, Al-Morished said.

Though the acquisition agreement term has been extended due to administrative issues in the US Federal Trade Commission, the chief executive expressed confidence that the deal would be completed.

Tronox is set to acquire Cristal’s titanium dioxide (TiO2)business for SAR 6.27 billion of cash and Class A ordinary shares representing 24 percent ownership in pro forma Tronox. 

The transaction has been challenged by regulatory bodies including the US Federal Trade Commission (FTC) and the European Commission, on grounds that it could reduce competition in the TiO2 market and lead to higher prices.

Last year, Cristal accounted for 10-15 percent of Tasnee’s earnings and 35-40 percent of its revenue, Al-Morished said.

Looking ahead, he noted that Tasnee is one of the world’s largest titanium producers, with a global market share of 10 percent. The Tadawul-listed company, therefore, plans to penetrate the military manufacturing industry.

In addition, Al-Morished sees an increase in future demand for petrochemicals, especially TiO2, in fields like aviation, automotive, military industries, and water desalination.