Iron price cycle weighed on Al Yamamah Steel’s Q3 2021/22 earnings, local demand: CEO

Al Yamamah Steel Industries Co. CEO Youssef Bazaid

Al Yamamah Steel Industries Co.’s Q3 2021/2022 financials were weighed by the iron price cycle, which began to tumble at the beginning of the second quarter of this year and affected local demand and global iron ore prices, CEO Youssef Bazaid told Argaam.

Q1 of this year witnessed high rises in iron ore prices, followed by a sharp drop in the second quarter of the year, Bazaid added, noting the decline rate surpassed 30%.

The CEO underlined that this fluctuating price cycle affected the progress of work on multiple projects and delayed the awarding of some new others. He sees more contracts to be granted after the iron ore price stabilizes in the coming period.

Plans are underway for the implementation of Al Yamamah Wind Power Systems Project, with SAR 240 million in investments, Bazaid said, indicating that funding was obtained from the Saudi Industrial Development Fund (SIDF) to cover 75% of the project's value.

He also pointed to Al Yamamah Steel’s robust financial position and satisfactory ratios of liquidity and financial leverage, stating that credit facilities of up to SAR 2 billion were acquired, of which 50% are utilized.

In the coming period, Al Yamamah Steel will seek to seize sales opportunities in the construction sector, in order to rotate inventory and replace high-cost inventory with cheaper ones.

Al Yamamah Steel’s net profit after Zakat and tax more than halved to SAR 69.7 million during the nine-month period ended June 30, 2022, from SAR 167.8 million a year earlier, with Q3 2021/2022 net profit amounting to SAR 550,000.