Obeikan Glass holds 50% of Saudi float glass market; eyes new transformative industries: CEO

Fayez Abdulrazzag CEO of Obeikan Glass Co.

Obeikan Glass Co. holds almost 50% of the clear float glass market in Saudi Arabia and exports its products to more than 45 countries around the world, Chief Executive Officer (CEO) Fayez Abdulrazzag told Argaam in an exclusive interview.

This came as the company maintained its high-quality products in line with the best global and local standards, backed by an excellent customer service.

Since the commencement of its commercial operations more than 10 years ago, Obeikan achieved outstanding results on the operating and profit levels, Abdulrazzag said.

The CEO expects 2021 results to hit a lifetime high and Obeikan to post better results going forward, driven by improved selling prices and cost-cutting plans, while maintaining production quality.

Moreover, the glass manufacturer has ambitious plans to expand in new value-added, transformative industries, which will strengthen its financial position, enhance shareholders’ equity and have a positive impact on the company’s market value.

Here’s the full interview with CEO Fayez Abdulrazzag:

Q: How was the company established and what about its business activities?

A: The company was incorporated as a closed joint stock company on Dec. 23, 2006, by Obeikan Glass Investment Group (OIG) and Saudi Advanced Industries Co. (SAIC) with SAR 200 million capital, divided into 20 million shares at a par value of SAR 10 each. On Feb. 4, 2019, the capital was raised from SAR 200 million to SAR 240 million, divided into 24 million shares at a par value of SAR 10 each.

Obeikan Glass Co. operates the largest float glass plant in Middle East market with the production capacity up to 800 tons per day. Its annual production capacity stands at 250,000 tons, in thicknesses ranging from 3 mm to 12 mm and sizes ranging between 6.50 meters in length and 2.66 meters in width. The plant was designed using the latest float glass technology. It is located in Yanbu Industrial City spanning a total area of 375,000 square meters.

Since inception, the company aimed to be a leading glass manufacturer, not only in the Middle East but in the entire world. It always seeks to continue its efforts to maintain development and the high quality of its products. The company also seeks to enhance its operating efficiency and reduce production costs, to meet its client demand, improve profit margins and achieve the highest returns for its shareholders.

Its products meet all international standards of the float glass industry. The company is certified ISO 9001:2015 and received CE Market Certification. It also grabbed the King Abdul Aziz Quality Award for 2020.

Obeikan relies on a basic production line for the manufacturing of clear flat glass, which commenced commercial operation in mid-2011. The company opened the coated (reflective) glass factory in 2016, which is a joint venture with one of the world’s largest glass companies, AGC Europe. In 2020, the Safety Glass Factory was opened. The two new factories represent an important addition to the expansion and introduction of value-added products to meet the new standards, specifications, and building codes in the Kingdom and worldwide. They also go in line with the latest technologies related to environmental sustainability. 

The glass manufacturer has a large customer base, including customers inside the Kingdom. It also exports to more than 45 countries around the world, including the continents of Asia, Europe, Africa as well as North and South America. 

Q: How was the company’s performance in 2020 amid coronavirus crisis? How did it manage to reduce the effects of the crisis? 

A: The company dealt with COVID-19 and developed the appropriate strategy to reduce the effects of the epidemic, especially during the lockdown period in the Kingdom and worldwide, when shipping had completely stopped. The company’s strategy was built on reducing production in line with its storage capacity during the lockdown period, when production was completely stopped. Thankfully, the strategy proved successful, as the company generated a strong profit in 2020 compared to similar industrial sectors that incurred losses in the year of the pandemic.

Q: How did the supply chain crisis affect the company’s raw materials and export sales? 

A: The supply chain crisis had no impact on the company’s supplies of raw materials and exports, especially in 2021. Obeikan Glass’ strategy addressed the whole issues related to the supply of raw materials, as well as the land and sea transportation of products. The management was keen to ensure that these operations are running under annual and binding contracts with raw material suppliers and shippers. Accordingly, it faced no difficulties with the contracted parties.  

Q: How do you see local competition and the company’s market share in the Saudi market? What are your plans to meet the Kingdom’s mega projects under Vision 2030?

A: The company has a wide customer base across the Kingdom. It holds nearly 50% of the Saudi clear float glass market. Obeikan Glass garnered this market share, thanks to its commitment to the best quality and customer service standards since inception to date. The company is ready to meet the future needs of the Kingdom’s planned projects under Vision 2030. Its three factories can fulfill all demand for various specifications and sizes, based on the applicable building codes. 

Q: What about the company’s outstanding debts? 

A: Obeikan Glass has a low leverage. In 2019, it signed a finance agreement with the Saudi Industrial Development Fund (SIDF) and a Murabaha agreement with the International Islamic Trade Finance Corporation (ITFC). The company operates according to a specific methodology, with respect to regular debt repayment. It has a strong conviction of its solid financial position and free cash flows, which help it meet all liabilities. Obeikan Glass’ leverage ratio is very low, compared to its annual sales, cash flows, balance sheet and assets. 

The company’s balance sheet is very strong. In October 2021, the glass manufacturer paid its first ever cash dividend at SAR 24 million. It is well qualified to repay all outstanding debts as scheduled.

Q: Why did Obeikan Glass move to list its shares on the Saudi market?

A: Driven by the great support lent by the competent authorities, which facilitate listing on the Saudi market, and backed by the company’s shareholders to apply the best governance standards and benefit from the resilient and competitive facilities obtained by the company, the board of directors opted to push ahead with listing the company’s shares on Nomu-Parallel Market. The company’s management is working on finalizing the required paperwork to transition to the main market.  

Q: Do you believe that the company’s stock was evaluated at a reasonable price to attract new investors?

A: The benchmark price disclosed in the registration document stood at SAR 68 per share, based on the company’s H1 2021 financial results. The company will soon officially disclose its 2021 results as a listed company. It has ambitious plans to expand in new value-added, transformative industries, which will strengthen its financial position, enhance shareholders’ equity and have a positive impact on the company’s market value.