Saudi Pipes’ 2014 net profit down 60% to SAR 31.5 mln

Saudi Steel Pipes Company, a manufacturer of welded steel pipes, reported 2014 net profit of SAR 31.5 million, a 60 percent decrease compared to the last year.

A net profit of SAR 5.3 million was reported for Q4-2014 compared to SAR 6.6 million for Q3.

The company attributed the decline of 2014’s net profit, compared to the last year, to:

1-   Loss from investments of the subsidiary (Titanium and Steel Manufacturing Co., Ltd.) and associate (Global Pipe Company) at total accumulated loss of SAR 28.9 million because both companies has started to prepare their income statement on January 1, 2014, where it is normal to incur loss on the start-up of operations especially for new industrial factories.

2- Increase of labor cost due to salary increment and increase of number of employees intended for the company expansion projects where some has started to operate in 2014 and the others will start to operate in 2015 as per company announcement related to our expansions dated March 30, June 29 and December 30 2014.
 

Q4-2014’s net profit decline compared to the same period last year, to:
1- Decrease of sales of medium diameter pipes because of unscheduled maintenance at the medium diameter factory where the company has also utilized to update the electronic control panels. Such unscheduled maintenance resulted in postponing deliveries from fourth quarter 2014 to 2015. Deliveries were already started in January 2015 and that will be reflected on the first quarter 2015 results.

2- The increase of labor cost due to salary increment and increase of number of employees for the expansion projects.

3- Due mainly to loss from investments of the subsidiary (Titanium and Steel Manufacturing Co., Ltd.) and associate (Global Pipe Company) at total accumulated loss of SAR 5.2 million. The loss is less than the previous quarters which indicates an improvement in their operations.

The decline of Q4’s net profit compared to the previous period (Q3-2014) was attributed to:

1- Decrease of sales of medium diameter pipes because of unscheduled maintenance at the medium diameter factory where the company has also utilized to update the electronic control panels. Such unscheduled maintenance resulted delaying deliveries from fourth quarter 2014 to 2015. Deliveries were already started in January 2015 and that will be reflected in the first quarter 2015 results.
2- The increase of labor cost due to salary increment and increase of number of employees for the expansion projects.