Low containerboard prices hit MEPCO’s margins: CEO

Sami Safran, CEO, Middle East Paper Co. 

Middle East Paper Co.’s (MEPCO) CEO Sami Safran said that the markets witnessed a corrective decline in global containerboard prices, which impacted the company's selling prices and profit margins.

However, domestic sales rose 30.73% quarter-on-quarter (QoQ), and exports rose 11.54% QoQ, he said in a phone interview with Argaam.

The percentage of domestic sales amounted to 61% in the first quarter of 2023, compared to 63% in the same quarter last year. On the other hand, the percentage of exports rose to 39% in Q1 2023, from 37% a year earlier, Safran stated. 

The global demand for containerboard fell by nearly 2% in 2022 compared to 2021, from mid-year, as previously indicated, he noted.   

The CEO explained that the containerboard industry traditionally goes through price and economic changes, expecting the demand to grow by 1.7% in 2023 due to the current global economic conditions.   

Asked about his outlook for the second quarter, he said that MEPCO targets economically buoyant markets with strong demand, such as domestic markets. 

Juthor Paper Manufacturing Co., which produces tissue paper, is expected to start commercial operation within a few weeks to make jumbo paper rolls of tissue paper to be used in manufacturing paper towels, pocket tissues, dining napkins and kitchen towels, Safran indicated.  

On the signing of a non-binding memorandum of understanding (MoU) with the Public Investment Fund (PIF), Safran said that the PIF as a strategic partner enhances MEPCO's expansion strategy for further growth and leadership,  fulfilment of the Kingdom's vision, and acceleration of non-oil economy growth.  

According to Argaam data, MEPCO recorded a loss of SAR 6.6 million in Q1 2023, against a profit of SAR 92.4 million in Q1 2022.