SASCO seen to post higher profit in 2023, add 100 new stations in 2 years: CEO

Riyadh Almalik CEO of SASCO

Saudi Automotive Services Co. (SASCO) posted strong results for 2022 on expansions and acquisition of an 80% stake in NAFT Services Co., Al Ekhbariya TV reported, citing CEO Riyadh Almalik.

He expects the company to post robust revenue in 2023, fueled by the recent acquisitions of new stations, which will boost earnings and help the firm pay a portion of its loans.

Commenting on posting low income, the CEO said this was due to NAFT acquisition – related expenses, expecting healthy earnings in the coming quarters as these expenses were non-recurrent.

Regarding the decision of not proceeding with the transfer of the remaining title deed related to some of SASCO’s owned sites, Almalik said there is delay in the transfer, but its impact is slight as it represents 5% or SAR 18 million of the total value of the title deed reaching SAR 400 million.

The company always looks for available opportunities, whether by acquiring new sites or exiting the current ones when they reach the appropriate market value, and then the firm rents them.

The number of SASCO stations reached 515 by the end of 2022. The firm also signed contracts for nearly 100 new stations, which will be launched in 2023 and 2024. In addition, the firm is in talks over other sites.

Accordingly, the number of stations will likely reach around 570 to 580 by the end of 2023, Almalik said, adding that the company targets 700 stations in the coming period.

The automotive services provider is currently working on the development of 30 important sites on main roads, the most important of which is Riyadh Al Qassim Road. This distinctive project will represent a qualitative leap in fuel stations in terms of area and services. It will be gradually launched starting from the second quarter of 2023.

SASCO is keen to expand in new cities and targets to cover all cities of the Kingdom.

Commenting on the impact of interest-rate hike on the company, the top executive said SASCO has a good reputation among banks due to its strong cash flows and revenue growth. He added that total loans reached SAR 1.6 billion, and the board of directors approved to early pay SAR 300 million to reduce the burdens of financing expenses.

The firm will continue with this procedure whenever it has enough cash to repay some loans, Almalik said.

He expressed optimism about the future of the sector in general, in light of the efforts played by the Ministry of Energy to encourage investment in this sector.

The percentage of companies to the number of operating stations stands at approximately 20%, which represents a great opportunity for these companies to expand, with the aim of improving the quality of services, after the qualification standards became more accurate. This increases competition and continuity of the best company, Almalik concluded.

SASCO reported a 76% rise in 2022 net profit to SAR 89.7 million, from SAR 50.8 million a year earlier, according to data available with Argaam.