SISCO Profits Fell to SR3.1 mln during Q2, down 86.2%

The Saudi Industrial Services Company (SISCO) revealed a decline in net profit after zakat and tax in the second quarter to SR3.1 million, compared to SR22.5 million in the same quarter of last year, by 86.2%,

This came after the announcement on Thursday of the preliminary financial results for the period ending on 30.06.2022 (six months).

The operational profit amounted to SR52.7 million in the second quarter, compared to SR83.6 million in the same quarter of the previous year, down 36.9%.

The net profit after zakat and tax in the 6-month period amounted to SR3.9 million, compared to SR54.7 million in the same period last year, a decline of 92.8%.

The gross shareholders’ equity “without minority rights” amounted to SR1.5 billion in the current period, compared to SR1.2 billion in the same period last year, a growth of 25.13%.

Profits per share in the current period reached 0.05 riyals, compared to 0.67 riyals in the same period last year.

The reason for the increase (decrease) in the net profit during the current quarter compared to the same quarter of the last year is

The decrease in net profit during the current quarter compared to the same quarter of the previous year is due to the following reasons:

– Continuing impact of global supply chain disruptions, affecting gateway and transhipment volumes in the Ports segment.

– Consequently, gross profit for the period declined to SR 99.7 million in Q2 2022, from SR 123.6 million in the same quarter last year, market challenges in the global port and logistics sectors impacted margins during the quarter.

– Despite improvement in the results from associate companies, reported net income for the quarter was SR 3.1 million compared to SR 22.5 million for the same quarter last year due to lower revenues.

The reason for the increase (decrease) in the net profit during the current quarter compared to the previous quarter of the current year is:

The increase in net profit for the current quarter as compared to the previous quarter is due to the following reasons:

– The current quarter (Q2 2022) witnessed a recovery of gateway and transhipment volumes in the Ports segment. On the other hand, Water solutions’ segment performance saw a strong recovery compared to the previous quarter (Q1 2022) where the Company reported a decline in revenue and gross profit due to a decrease in the production at the Kindasa plant which impacted revenues and profitability.

– Improvement in the results from associate companies.

The reason for the increase (decrease) in the net profit during the current period compared to the same period of the last year is:

Reported net income for the period was SR 3.9 million compared to SR 54.7 million for the same period last year, due to a decline in ports revenues and gross margins as a result of continued pressure on gateway volumes coupled with a decline in water segment revenues and gross margins during the first quarter.

Financial statements for the current period have been prepared according to the International Financial Reporting Standards (IFRS) that are endorsed in the Kingdom of Saudi Arabia and based on that the presentation, measurement, recognition, and disclosure of some of the financial data have been changed to comply with IFRS accounting policies as adopted in the Kingdom.

In accordance with IFRIC 12 (IFRS Interpretations Committee) 12, the reported revenue includes construction revenue of SAR 30.3 million. There is no impact on gross profit or net profit as there is a corresponding construction cost of SAR 30.3 million recognized in the cost of revenue.

Outlook and strategy:

SISCO remains committed to the delivery of its five-year strategy to drive long-term value creation, aiming to double revenues to SR 2 billion by 2025. SISCO’s investment approach focuses on value accretive investments that are in line with its strategic focus areas of ports, logistics and water. SISCO will announce updates to the market as other opportunities materialize.

Management believes that improved gateway and transhipment volumes are showing promising signs of recovery, which will be supportive to the local gateway market, benefitting from the expected increase in shipping line capacity.