MEPCO Profits Jump 130% during Q2 to SR99 mln

The Middle East Paper Company (MEPCO) for the manufacture and production of paper revealed that the net profit after zakat and tax in the second quarter increased to SR99.1 million, compared to SR43.08 million in the same quarter of last year, by 130.2%.

This came after Middle East Company announcement on Monday about the preliminary financial results for the period ending on 30.06.2022 (six months).

The operational profit amounted to SR107.06 million in the second quarter, compared to SR49.8 million in the same quarter of the previous year, a growth of 114.7%.

The net profit after zakat and tax in the 6-month period amounted to SR192.2 million, compared to SR60.8 million in the same period last year, an increase of 216%.

The gross shareholders’ equity “without minority rights” amounted to SR1.12 billion in the current period, compared to SR812.5 million in the same period last year, an increase of 38.19%.

Profits per share in the current period reached SR3.84, compared to SR1.22 in the same period last year.

The reason of the increase (decrease) in the net profit during the current quarter compared to the same quarter of the last year was the increase in net profit is increase in revenue by 39% as a result of increased in selling prices for all the company’s products driven by an increase in global product prices that resulted in GP Margin growth from 33% to 46%.

The impact of the above increase in sales and gross profit is partially offset by an increase in the selling and distribution expenses by SR6M, general and administrative expenses by SR6.5M, impairment of financial assets by SR3M, other expenses by SR4.3M, finance costs by SR0.6M and zakat expenses by SR0.4M.

Selling and distribution expenses are increased due to an increase in the logistics cost of shipping goods to customers. General and administrative expenses are increased mainly due to normal salary increments and additional manpower hired by the Company. Other expenses mainly comprise forex losses and increase in impairment is as per the ECL model as per IFRS-9.

The main reason for the increase in net profit while compared to the preceding quarter is an increase in revenue by 14% owing to both the increase in demand and sustained increase in selling prices of the Company’s products. As a result, GP increased by 12%.

The impact of the above is partially offset by an increase in the SG&A by SR8.5M, impairment of financial assets by SR2.6M, other expenses by SR 0.5M, and finance costs by SR1.1M.

The reason of the increase (decrease) in the net profit during the current period compared to the same period of the last year was increase in net profit are an increase in revenue by 45% owing to higher demand and selling prices. As a result, GP increased by 131%.

The impact of the above is partially offset by an increase in the selling, general and administrative expenses by SR21.4M, allowance for impairment of trade receivables by SR2.8M, zakat expenses by SR3.7M, other expenses by SR7M and reduction in other income by SR5M. Increase in SG&A is due to increase in transportation and payroll costs. Other expenses comprise of forex loss of SR5M and SR2M loss on disposal of fixed assets. Also, the reduction in other income mainly pertains to SR2.8 million from scrap sales and reduction in profit on disposal SR2.4 million.

Certain prior period figures have been re-classified to conform to the presentation in the current period.

The net profit for the current six-month period is the highest reported profits since the incorporation of the company. For more information, please find the attached press release.

The profit per share was calculated after zakat and income tax.