Saudi-based East Pipes Integrated Company for Industry (East Pipes) has reported robust improvement in profitability for the nine months period ended 31 December 2022, with its revenue surging to hit SR996 million ($265.12 million), up 147% over the previous year mainly driven by underlying demand and continued strength in its backlog.
Announcing its financial results for the third quarter and nine-month period ended 31 December 2022, East Pipes said the remarkable improvement in profit was mainly due to the solid top-line performance, which has outweighed the impact of rising financial charges.
For nine-month period ended December 31, 2022, the Saudi group has registered a net profit of SR63 million, compared to a net loss of SR18 million the year before.
The cash and cash equivalents increased 4% YTD to SR77 million (31 March 2022: SR74 million), while total borrowings increased 61% YTD from SR274 million to SR442 million, as a result of the increase in working capital for the implementation of projects assigned by clients, said the Saudi company in its statement.
On its third quarter results, East Pipes said its revenues for the 3Q-FY23 surged 61 per cent to SR487 million and 266% YoY (2Q-FY23: SR303 million; 3Q-FY22: SR133 million).
This was due to a large pickup in both sales volumes and average sales prices, supported by a revival in demand, on the back of enhanced sentiment in the market, it added.
The ebitda amounted to SR67 million in 3Q-FY23 (2Q-FY23: 20 million; 3Q-FY22: ebitda loss of SR8 million), which is essentially attributed to the improvement in the top-line performance. For 9M-FY23, ebitda amounted to SR104 million, compared to SR18 million in 9M-FY22.
This was despite the following: an increase in cost of sales due to the rise in the average cost of per ton of main raw materials and an increase in the level of production, it stated.
The Saudi group's ebitda margin was 13.7% in 3Q-FY23 (2Q-FY23: 6.5%; 3Q-FY22: -6%), and 10.5% for 9M-FY23, compared to 4.7% for 9M-FY22, driven by a robust pipeline of projects, in line with the government’s continued focus on infrastructure development across the Kingdom, as part of the Vision 2030 agenda.
East Pipes pointed out that for Q3, it has swung to SR48 million net profit compared to a last year when it had registered a net loss of SR19 million. The swing was mainly due to sustained project activity, leading to an influx in sales volumes during the period, which resulted in a significant rise in revenues.
On the solid performance, CEO Mohammed Al Shaheen said: "I am pleased to announce a rising trend in profitability in the third quarter of this fiscal year, which is a powerful indicator of our position as a leading domestic player in this dynamic industry."
"As a means of securing greater market share, we have enhanced our marketing initiatives, whilst continuing to focus on the innovation and quality of our products. The favorable prospects for the sector, as a result of significant project announcements under the Vision 2030 umbrella, bode well for our business, as we continue to capitalize on this momentum to reach greater heights," he stated.
"The solid and strategic partnerships that we have maintained over the years are indeed integral to our growth and development, and are a key component enabling us to deliver a healthy operational and financial performance," he added.
Chief Financial Officer Mohamed Darweesh pointed out that East Pipes had delivered a solid set of financial results this quarter, driven by robust underlying demand and continued strength in its backlog.
"This performance was also boosted by our strong customer base leading to a sustained increase in sales volumes, compared to previous periods," he noted.
"The foundations for a successful financial year are indeed in place, and the priority is for the company to continue to achieve operational excellence and to pursue this path to growth, by taking advantage of the key competitive strengths that East Pipes is well-recognized for in the market," he added.-TradeArabia News Service