Tasnee CEO expects average prices to remain at levels closer to 2024 levels

Fawaz Al Fawaz, CEO of National Industrialization Co. (Tasnee)

Fawaz Al Fawaz, CEO of National Industrialization Co. (Tasnee), expects average prices this year to remain close to 2024 levels, given ongoing geopolitical challenges, economic recession, and the anticipated capacity additions from China and the US for certain polymer products.

In an interview with Argaam, Al Fawaz added that there some prices may see gradual improvement in the coming periods, coinciding with the expected rise in demand for petrochemical products and the gradual decline in interest rates on financing and loans.
 

On the company's current stock price, the CEO explained that the current stock price does not reflect its fair value. Tasnee’s board recommended initiating regulatory procedures to amend the company's bylaws and seek approval from the extraordinary general meeting to repurchase up to 66.9 million treasury shares. The buyback repurchase will commence once the necessary regulatory approvals are obtained and will take three years.

Elsewhere, Al Fawaz attributed the drop in 2024 profits to a decrease in the company’s profit share from joint ventures (JVs), lower sales volumes for certain products, and higher costs of sales and raw materials. He also cited an increase in selling, distribution, general, and administrative expenses due to the consolidation of the financial results of the Saudi Acrylic Polymer Co. (SAPCO), along with higher impairment provisions for non-financial assets.

These factors also impacted operational income levels due to increased operating costs from consolidating SAPCO’s financials and lower joint venture profits. However, part of these negative impacts was offset by gains from business combinations and the reassessment of Zakat provisions after receiving several final zakat settlements throughout the year, leading to a reduction in zakat expenses for 2024.

Regarding the impact of consolidating SAPCO’s financials and acquiring a 25% stake in the company, Al Fawaz stated that these transactions pushed revenue and costs of sales higher in 2024. He further explained that the acquisition of Saudi Acrylic Monomers Co. (SAMCO) at the end of 2024 bolstered the company’s results, as it recorded gains from this acquisition.

He emphasized that these acquisitions were crucial for completing the restructuring and refinancing of the Acrylic Complex’s loans. The company successfully finalized the restructuring and financing of these loans, providing the complex with greater flexibility in production and operations while reducing financing costs. This, in turn, is expected to boost the complex’s economics and cash flows in the coming periods.