FIPCO’s capital hike aims to raise liquidity for sales growth, cost cut: CEO

Abdullah Alharbi, CEO, Filing and Packing Materials Manufacturing Co. 

Filing and Packing Materials Manufacturing Co.’s (FIPCO) planned capital increase aims to strengthen working capital to help the company grow sales and invest in the automation of some production stages, CEO Abdullah Alharbi told Argaam in an interview.

FIPCO reported a 17% rise year-on-year in sales and aims to boost this figure in 2023 and beyond. It seeks to enhance its position, as MENA’s largest player in the packaging products market, and support the operations of its subsidiary, FPC Industrial Co., to garner a better market share. 

Alharbi underlined the importance of supporting sales through a suitable financing mix, backed by solid working capital regardless of a complete reliance on bank facilities, which would squeeze profit margins amid rising interest rates.

“We have already stated a plan to repay debts. We paid off SAR 17.7 million debts and seek to repay further SAR 30 million after increasing capital,” the CEO added.

The capital hike also aims to help FIPCO invest in automating some production processes to enhance operating and quality efficiency. FIPCO plans to automate its warehouses and invest in power reduction to cut production costs. Power consumption costs SAR 7 million annually.

Moreover, the CEO pointed to rising interest rates and human resources costs as two factors that are likely to weigh on profit margins in the coming period.

FIPCO will also invest in reducing workforce through automating some operations and bolstering technical jobs for Saudi youth, as industrial firms are no longer exempted from the financial consideration imposed for expats. FIPCO employs almost 1,000 people with salaries of over SAR 40 million annually.

Proceeds from the capital increase are expected to be utilized from Q3 2023, Alharbi concluded.