Riyadh Cables CEO says demand strong in Q4 2022, sales abroad constitute 27% of total

Headquarters of Riyadh Cables Group Co.

Riyadh Cables Group Co. (RCG) witnessed strong demand in the fourth quarter of 2022, with an increasing backlog month on month, CEO Borjan Sehovac told Argaam in an interview.

The current backlog stands at SAR 3.6 billion, compared to SAR 3.4 billion at the end of 2022, signaling that 2023 will be a good year.

RCG is a major cable supplier for renewable energy projects. It also supplies the Kingdom’s Vision 2030 projects with locally manufactured products.

Sehovac added that all products in RCG’s portfolio attracted strong demand. Further, introducing extra high voltage (EHV) products in the Saudi market had a notable effect on the company’s market share. The aluminum-based products also had an increasing share of the product mix in 2022 due to higher demand for overhead lines (OHL) and a larger share of local strategic tenders.

The company’s financial results demonstrated RCG’s operational and financial ability as a regional leader in the wires and cables industry. The cable producer recorded higher revenues driven by a steady increase in sales volume in the third and fourth quarters.

“The enhanced volume, coupled with efficient cost control improved bottom line for this period,” the CEO added.

Moreover, sales outside the Saudi market constitute nearly 27% of total volumes. Volumes increased by 13% on a sequential basis in Q4 2022, and 39% compared to Q4 2021. This positive performance was driven by high demand and the company’s competitive advantages in these markets.

Globally, prices of non-ferrous metals such as copper and aluminum increased 10% in 2022, and witnessed fluctuations over time in response to global demand/supply cycles.

“We make sure to buy the essential raw materials by engaging in long-term contracts with suppliers and, more importantly, we have adopted a strict hedging mechanism with which we completely hedge all the contracts. As a result, fluctuations in the metal prices are completely passed to the market without impacting our profit,” Sehovac indicated.

RCG announced the board of directors’ proposal to pay a cash dividend of SAR 225 million, or SAR 1.50 per share, for 2022, subject to general assembly’s approval. It also paid interim dividends of SAR 20 million in 2022 to shareholders as of May 2022.

The cable producer reported a net profit of SAR 351.9 million in 2022, up from SAR 240 million a year earlier. The fourth-quarter net profit came in at SAR 105.9 million, Argaam earlier reported.