Sipchem CEO says products witnessing strong demand in Q1 2022

CEO of Sipchem Abdullah Alsaadoon

Sahara International Petrochemical Co. (Sipchem) is witnessing robust demand for its petrochemical products in the first quarter of 2022, CEO Abdullah Alsaadoon told Argaam in a phone call interview. 

He expects 2022 to be a better year for the petrochemical sector, due to strong demand for petrochemical products, as well as high energy and oil prices, amid the ongoing recovery of economies.

Commenting on the fourth-quarter financials, Alsaadoon said demand for products, high petrochemical prices and improved financial performance contributed to the profit growth.

He added that Sipchem leveraged from high product prices and its capabilities in sales and marketing in the Kingdom, Switzerland and Singapore, noting that the sales movement contributed to maximizing the return on the company's products and ability to meet customer demand.

The top official highlighted the firm’s flexibility in controlling production due to the integration of factories and diversification of products, indicating that the petrochemical producer was able, through its ability to plan sales, to produce the maximum quantity of high-value products based on market demand.

Sipchem’s average selling prices increased by 87% year-on-year (YoY) in 2021, while they grew by 16% quarter-on-quarter (QoQ) in the fourth quarter of 2021.

Some of the company’s products, such as the acetyl chain of vinyl acetate monomer (VAM), ethyl acetate (EA) and acetic acid (AA), are among the top five drivers in the global market, along with a huge customer base, Alsaadoon said, adding that the firm is the third-largest importer of VAM and EA.

“What distinguishes the company is its diversified product portfolio in most sectors, especially as the diversification is necessary to achieve strong and sustainable performance despite the challenges that may occur in certain sectors,” the CEO said.

He added that Sipchem undertook several initiatives over the past three years after merging with Sahara Petrochemicals Co., where it managed to post a profit of more than SAR 298 million after disposing of poor-performing assets, in addition to reducing fixed costs, enhancing plant reliability, as well as reducing debt and financial restructuring.

Through a combination of strong product portfolio, reliable factories and global marketing presence in more than 100 countries, Sipchem will be keen to meet customer satisfaction and aggrandize shareholder’s equity in 2022.

Speaking on the size of the company’s debts, the top executive said the long-term loans decreased by SAR 2.1 billion in 2021, and accordingly, the debt-to-equity ratio fell from 54% to 34% in 2021 due to the growth in the operating cash flow.

“Sipchem is in talks with the competent authorities to participate in the “Shareek” program,” Alsaadoon said.

With regard to the effects of the Ukrainian crisis on the company’s operations in Europe, he said it does not impact the firm’s ability and contractual obligations with customers in Europe.

The recent developments in Ukraine arose more concerns in the European market, the CEO said, expecting prices to rise in the short term.

In all cases, the Saudi petrochemical producer is closely monitoring the situation developments and is ready to shift its supplies to areas that offer better returns while maintaining its contractual obligations to customers, he concluded.

Sipchem reported a net profit after Zakat and tax of SAR 3.591 billion for 2021, compared to SAR 175.9 million a year earlier. Q4 2021 net profit reached SAR 1.321 billion, compared to SAR 317.64 million in Q4 2020, according to data available with Argaam.