JAZADCO has over SAR 600 mln worth assets in various sectors: CEO

Jazan Energy and Development Co. (JAZADCO) has more than SAR 600 million worth assets in agriculture, manufacturing industry, and real estate, CEO Bedor Al-Rashoudi told Argaam in an exclusive interview on Wednesday.

The food sector accounts for most of JAZADCO’s operations, Al-Roshoudi said, expecting less impact from the coronavirus outbreak on the food sector when compared to other industries locally and overseas, given that the impact will be more significant if the crisis lasts for a long period.

The company’s higher sales in 2019 were driven by a revenue rise of 24% and 6.5% year-on-year (YoY) in the agricultural and industrial segments, respectively.

Here’s the full interview with Al-Rashoudi:

Q: Can you provide more details on the company’s assets?

A: JAZADCO owns over SAR 600 million worth assets distributed in the agricultural sector, including shrimp farming which was launched in 2002. Since 2002, the company focused on developing and expanding its farm, and providing engineering and logistic support services. It also established a new plant for shrimp packaging. The factory produces nearly 3,000 tons annually of shrimp – Head-on shell on (HOSO)- which is exported worldwide.

JAZADCO also owns a fruit farm, which focuses mainly on mango cultivation with a total production capacity of 2,000 tons.

The agricultural business is the company’s main activity. It reported a revenue of SAR 34.2 million in 2019, accounting for almost 48% of total revenue.

In the manufacturing industry, the company set up a water bottling factory in 2008. The manufacturing business recorded SAR 28.03 million in sales revenue, representing 39% of total revenue in 2019.

JAZADCO has various real estate investments, mainly the residential complex in Jazan city. The segment’s sales hit SAR 9.66 million in 2019, accounting for 13% of total sales revenue.

Q: What is the reason behind sales rise to SAR 72 million in 2019, from SAR 69 million a year earlier?

A: The higher sales were buoyed by improved performance in the manufacturing and agricultural business. Revenue from the manufacturing and agricultural business rose by 6.5% and 24% YoY, respectively.

Q: JAZADCO acquired 65% of Mango Jazan Company. What was the financial impact of the acquisition and how do you see its performance going forward?

A: The acquisition came as part of JAZADCO’s new strategy that focuses on benefiting from advanced technology and marketing to achieve rapid growth.

A total of 14 million people in Saudi Arabia are shopping online. The application allows JAZADCO to distribute its local products across the region and enter new markets.

Q: JAZADCO owns a 45% stake in Advanced Aquaculture Company. Can you provide more details about the company’s assets in the new entity arising from the merger of four players?

A: The merger of three companies with JAZADCO’s shrimp farming business will have a positive impact on the industry growth in the Kingdom, in line with Saudi Vision 2030. JAZADCO owns 45% of Advanced Aquaculture, as it contributed its 100% assets of its shrimp farm.

Q: What are the products offered by Advanced Aquaculture? And when will it launch the 60,000 metric tons production, and what is the expected financial impact on JAZADCO?

A: The new entity will allow the company to diversify its product portfolio, boost production capacity and enter new markets. The merger will contribute to the Kingdom’s domestic objectives related to increasing the local aquaculture production capacity.

When the merger is complete, production is expected to begin with 60,000 metric tons, ahead of doubling to 120,000 metric tons in the second phase. JAZADCO aims to produce 300,000 metric tons by 2035.

Q: How do you assess the financial impact of coronavirus on the company’s business?

A: The coronavirus outbreak has a significant impact on all sectors locally and overseas. However, the Saudi government’s SAR 120 billion stimulus packages has reflected positively on local market liquidity and stability. JAZADCO is committed to its production plans and is working on stabilizing prices.

We expect less financial impact in the short term on the food industry, compared to other sectors locally and abroad. However, the coronavirus impact on the food sector will be more significant in case the crisis lasts for a longer period.