Bawan official says negative impact of building code 'temporary', recovery expected soon

Mohammed Al Balawi, Chief Financial Officer (CFO) at Bawan Co.

The start of implementing the Saudi Building Code is a positive step, but as a new measure, its implementation negatively affected demand during the third quarter, especially the group's metal industries segment, Mohammed Al Balawi, Chief Financial Officer (CFO) at Bawan Co., told Argaam in an exclusive.

However, he added that this negative impact is temporary and recovery is expected soon, noting that developers and individuals will take time during this stage to ensure that they understand the requirements of the code and abide by them.

However, he added that this negative impact is temporary and recovery is expected soon, noting that developers and individuals will take time at this stage to ensure that they understand the requirements of the code and abide by them.

The group managed to increase the quantities sold during the third quarter of 2021 compared to the same quarter of 2020 in the metal, concrete and plastic industries by 21%, 10%, and 7%, respectively. This was despite the decrease in the quantities sold in the electrical and wood industries segment by 7% and 10%, respectively.

The decline in the quantities sold of metal products by 23.4% contributed substantially to the decrease in Q3 2021 revenue compared to the previous quarter.

The company's portfolio includes investments related to initial offerings in the Saudi market, which aims to diversify sources of income, Al Balawi said, adding that this contributed to slight profits amounting to SAR 1.6 million in Q3 2021.

The loans that were repaid during the three-month period amounted to SAR 64.1 million, while the outstanding loans amounted to SAR 706.7 million as of Sept. 30, 2021, which are mainly related to financing the working capital requirements and represent 89% of total equity.

Al Balawi stressed the management's keenness to improve its financial solvency and maintain appropriate debt ratios that would enable the company to engage in future investment expansions.

Bawan reported a net profit after Zakat and tax of SAR 40.9 million for Q3 2021, compared with SAR 29.6 million a year earlier, according to data available with Argaam.