The Middle East Paper Co (Mepco), a vertically-integrated paper manufacturer in the region, has reported a net profit of SR57 million ($15.19 million) for the six months ending on June 30, an increase of 166pc, compared to the same period in 2017.

The company’s total sales revenue amounted to SR444 million ($118.39 million) in the first half of this year, an increase of 25.6pc on a year-on-year basis, compared to the same period last year, said a statement from the company.

In the second quarter (Q2) of this year, total sales of SR219 million ($58.38 million) declined slightly from SR225 million ($59.9 million) in Q1 of this year, representing a decrease of 2.9pc, it said.

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 stabilised international and regional pricing environment and increased allocation to non-export distribution, it added.

Drivers for improved year-on-year sales performance include a stabilised international and regional pricing environment and increased allocation to non-export distribution, it added.

The company’s gross profit of SR125 million ($33.32 million) in H1 2018 increased 62.4pc from H1 2017, and by 1.6pc on the first quarter.

Improved performance was driven primarily by successful cost calibration. Operating profit of SAR 72 million ($19.19 million) in H1 2018 increased by 94.6 per cent from H1 2017 and increased by 4 per cent on the first quarter, mainly due to an increase in non-conventional product sales to constitute 33 per cent of total sales (up from 25 per cent in H1 2017).

Basic and diluted earnings per share (EPS) of SR1.14 for H1 2018 improved from SR0.43 in H1 2017.


Engineer Sami Safran, chief executive officer, said: “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,” he said.

“Demand for containerboard locally, in Middle East and North Africa (Mena) and internationally continues to grow. Recently, we have allocated higher volumes to the local market, which is now 59 per cent of total sales as compared with 54 per cent in the first half of 2017,” he added.

Dr Mohamed Saleh Darweesh, chief financial officer, said: “We are now seeing a tangible impact from our cost optimisation programme. In addition, the restructuring and improved efficiency of our production processes, driven partly by the roll-out of our SAP systems, is directly benefitting financial reporting. In terms of our debt position, we have successfully reduced our borrowing levels by SR81 million ($21.59 million) as compared with H1 2017.”

“This is an important achievement in a rising interest rate environment. We have successfully reduced our cost of financing through favourable lending terms, despite increased average Saibor rates. We will continue to work on reducing our debt levels and improving our debt-to-equity ratio, which currently stands at 0.91,” he added. – TradeArabia News Service