Higher output, prices contributed to Sipchem’s profit margins: CEO

Increase in output and sales volume, higher prices of products and improved efficiency of factories contributed to achieving higher profit margins, Ahmed Alohali, chief executive at Saudi International Petrochemical Co (Sipchem), told Argaam on Wednesday. 

In a phone interview, Alohali added that the majority of the company’s affiliated plants have been operating in full capacity, pointing to the importance of the dependency ratio, which is represented in the operation of the factories and reducing their stoppage periods for maintenance.

In the second quarter of the year, the company’s plants recorded 97 percent dependency ratio and their output rose 10 percent quarter-on-quarter, which led to higher sales by more than 20 percent during the same period.

Sipchem reported a more than three-fold jump in the second-quarter net profit to SAR 211.4 million, compared to SAR 59.8 million, according to data compiled by Argaam.

The CEO highlighted that the firm evaluates its assets and investments periodically for the available the selling and purchasing opportunities for Sipchem’s assets or those available in the market, to maximize the returns for the shareholders.

The Saudi-listed company seeks increasing its stake in its affiliated International Gases Company (IGC) from 72 percent to 97 percent, by purchasing the National Power Company’s stake through the available finances or short-term facilities.

Regarding the commercial operations of the polybutylene terephthalate (PBT) plant, Alohali said that the production capacity of the plant is expected to reach 65,000 tons per year.

As for the methanol production project depending on shale gas in the US, the CEO highlighted that there are no developments regarding the project nor a set timetable. He added that the size of the project and its new location in the US require more technical and financial evaluations.

Methanol prices achieve good growth level in the global markets, the CEO said, expecting that level to continue for the rest of the year an until mid-2019.

Alohali pointed that Sipchem works on completing the procedures of the merger with Sahara Petrochemicals Co. before the end of the year, highlighted that discussions between the two companies are going well.