MEPCO achieves 1H net profit increase of 166%

Driven by improving demand and increased pricing

  
Eng. Sami Safran, CEO, MEPCO

Eng. Sami Safran, CEO, MEPCO

Jeddah, Saudi Arabia: The Middle East Paper Co. (‘MEPCO’), the region’s leading vertically-integrated paper manufacturer, has announced its interim financial results for the six months ended 30 June 2018. Net profit of SAR 57 million in the first half increased by 166% on H1 2017.

STRATEGIC HIGHLIGHTS

  • Stabilisation of pricing trends since Q3 2017, with global containerboard pricing currently robust.
  • Improved demand in global markets, as well as increased product diversification is directly and positively impacting profitability.
  • Further cost optimisation measures have continued to positively impact performance.

Eng. Sami Safran, Chief Executive Officer, comments:

“We are pleased to announce continued improvement in year-on-year performance and we are also comfortable with our performance in Q2. On a YTD basis, operating and financial performance is very much on track and according to plan. Improved sales revenues have primarily been driven by stabilized market pricing, which has occurred since Q3 2017, along with a higher level of product diversification, which has positively influenced profitability. Demand for containerboard locally, in MENA and internationally continues to grow. Recently, we have allocated higher volumes[1] to the local market, which is now 59% of total sales as compared with 54% in the first half of 2017.” 

OPERATING REVIEW

Sales performance

Total sales of SAR 444 million in H1 2018, as compared with SAR 353 million in H1 2017 improved by 25.6% on a year-on-year basis. In Q2 2018, total sales of SAR 219 million declined slightly from SAR 225 million in Q1 2018, representing a decrease of 2.9%. Consolidated sales volumes decreased slightly on a year-on-year and quarterly basis, due to volume decreases for the subsidiary WASCO. Drivers for improved year-on-year sales performance include a stabilized international and regional pricing environment and increased allocation to non-export distribution.

Operational update[2]          

Ongoing cost optimization efforts have continued to positively impact performance across the manufacturing process. Meanwhile, the activation of newly introduced SAP systems across business verticals and subsidiaries has improved the structural and operating efficiency of the company.

[1] Refers to MEPCO standalone volumes

[2]   Refers to MEPCO standalone volumes

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