Aldrees says fuel price hikes to weigh on profit margins

Saudi Arabia’s recent fuel price hikes will pressure Aldrees Petroleum and Transport Services Co.’s profit margins, which have remained unchanged, the company’s vice chairman, Abdulmohsen Aldrees, told Argaam in an exclusive interview on Thursday.

“Amid the current prices, Aldrees will suspend its station revamp program,” Abdulmohsen said, adding the company is considering a scale-down of its stations, if necessary, amid the current market conditions, fuel tariffs and zero change in the profit margin.

The company had earlier spent SAR 260 million out of the originally allocated SAR 450 million on revamping stations along with other SAR 40 million invested in the same program recently.

The remaining SAR 150 million, however, will be transferred to the company’s account with a portion allocated for covering higher energy and labor costs.

Fuel station operators have recently doubled the guarantee provided for state-run Saudi Aramco to almost SAR 1.2 billion from SAR 600 million, based on their needs.

Aldrees has started providing warehousing management and handling services since three years.

The fuel retailer’s business model diversification helps it weather the negative impact of economic cycles, Abdulmohsen said.