Tasnee maintains foothold in strategic, high-yield markets: CEO

Fawaz Al-Fawaz, CEO of National Industrialization Co. (Tasnee), said that the company continues to maintain its presence in strategic markets around the world, focusing on Saudi Arabia, GCC countries, the Middle East, Africa, India and Turkey, in addition to some European and Asian markets.

The company is focusing on high-yield markets such as Africa, Turkey and India. The recent economic stimulus in China will likely have a positive impact on demand and economic growth in the future, he added, in an interview with Argaam.

He indicated that the geopolitical, economic and supply chain challenges in the region require advance planning, especially in coordination with shipping companies and the availability of containers, adding that Tasnee is working to refocus on some markets according to the availability of transportation.

The company recorded positive results in Q3 2024 despite the economic and geopolitical challenges, which is positive for shareholders. This came as a result of efforts to improve operational efficiency and boost the quantities sold, said the CEO.

He added that the continuous improvements in plant operations and investment revenues helped support financial results, with Tasnee successfully rationalizing general and administrative expenses despite the increase in the cost of sales and the decline in the share of profit from affiliates.

The 23% rise in Q3 topline year-on-year came thanks to intensive marketing efforts and an increase in the quantities sold, which reflects the overall improvement in operating efficiency, according to Al-Fawaz.

He explained that Tasnee’s financial results include revenues generated by wholly-owned subsidiaries, represented by manufacturing industries, metallurgical industries that include titanium products.

The company began consolidating the results of Saudi Acrylic Polymers Co. (SAPCO) within its financial statements since Dec. 5, 2023 after acquiring the foreign partner's stake, which led to an increase in revenues thanks to the higher sales volume and improved operating efficiency.

Tasnee also aims in the coming months, through restructuring the acrylic segment, to improve its efficiency and performance, the CEO said.

“There are challenges and pressures resulting from the slowdown in demand in some global markets as a result of the economic slowdown and supply chain turmoil,” he noted.

Prices of basic petrochemical products such as polypropylene and polyethylene rose by an average of $1,000-1,200 per ton, an increase of 10-12% YoY in Q3 2024. Fluctuations in global prices came as a result of changes in demand while the company focuses on the reliability of its plants, boosting production and reducing costs, Al-Fawaz stated.

Meanwhile, joint venture generated about SAR 190 million profit in Q3 2024, compared to SAR 214 million in Q3 2023. Net profit for 9M 2024 reached SAR 437 million, down from SAR 542 million in 9M 2023.

The decline in net profit from joint ventures is mainly due to lower prices and halt in production, in addition to the slowdown in global demand and the delay in the recovery of global economies, according to Al-Fawaz.

“As for the latest developments in Tasnee’s projects, that there is an expansion in the ethylene plant in Jubail by adding a new furnace, with expectations of kicking off production in 2026. The project will help improve the economics of production and increase production capacity, which will enable the company to meet the growing demand and provide products at a low cost,” said the CEO.

Al-Fawaz also showed that the cracker project in Jizan aims to feed the titanium industries, as the company continues to develop production chains to achieve sustainable growth and enhance the project's contribution to improving profit margins.

He stressed that geopolitical tensions, global economic challenges and supply chains disruption have weighed on growth expectations, adding that some challenges may be a source of opportunities if exploited positively.

The CEO expressed optimism about the rebound of the global economy upon receding geopolitical conflicts, which will enhance the stability of supply chains and lead to gradual growth in demand and improved prices.

He added that Tasnee is committed to improving the efficiency of its plants and increasing production to meet customer needs and maintain their confidence, noting that it seeks to work side by side with customers to overcome challenges, thus serving the interest of all.

According to Argaam’s data, Tasnee posted SAR 69.8 million net profit for the first nine months of 2024, compared SAR 191.7 million in the same period a year earlier. Q3 net profit stood at SAR 89 million.