East Pipes turns to SR3.24 mln losses in 1Q

East Pipes Integrated Company announced reporting losses after zakat and tax at SR 3.24 million in the first quarter of 2022 compared to profits of SR 148.3 million during the same period of 2021.

This came after East Pipes announcement on Thursday of the preliminary financial results for the period ending on 31.03.2022 (three months).

The company’s operational profit plunged 92.8% to SR 14.8 million in the 1^st quarter of the current year from SR 207.7 million in the same period of the previous year.

Gross profits of East Pipes fell 85% to SR 34.5 million in the first quarter of this year from SR 230 million a year ago, while the loss per share decreased to SR 0.15 from profit per share at SR 14.63.

East Pipes reported a net loss of SAR 3 million for FY2022, compared to a net profit of SAR 148 million for FY2021, primarily due to the following reasons:

Revenues

The company achieved revenues of SAR 597 million in FY2022 (102%), translating to a decline of 36% from SAR 936 million during the previous fiscal year. This was driven by the delays in releasing and awarding key projects by major clients, and by supply chain interruptions, resulting from the COVID-19 pandemic. Total sales volumes decreased 26% for Pipes sales and 23% for Coating sales, whilst the Sales Price per on decreased by SAR 600 for Pipes and SAR 16 for Coating.

Gross profit

Gross profit decreased to SAR 35 million from SAR 230 million (-85% YoY), essentially due to the shrinking production volumes, in addition to a remarkable rise in Cost of Sales per ton, as well as a sharp increase in the cost of the company’s main raw materials during the year.

Net profit

East Pipes reported a net loss of SAR 3 million for FY2022, compared to a net profit of SAR 148 million in FY2021. This is primarily a reflection of the large decline in revenue, coupled with the unprecedented increase in the cost of the company’s main raw materials .

General and administrative expenses increased by SAR 2.6 million, as a result of the company restructuring and developing the corporate governance , whilst selling and marketing expenses increased by SAR 2.9 million during FY2022.

Nevertheless, this was partially offset by a drop in financing costs by SAR 15.4 million, and a decline in depreciation expenses by SAR 15.6 million, arising from a revision of the estimated useful life range of the company’s plant and machinery.

Additional Information:

Earnings per share (after zakat and income tax) calculation:

• The weighted average number of shares for the fiscal year ending on 31 March 2021, has been modified to reflect the increase in the number of shares due to the transfer of loans from shareholders. Therefore, the weighted average number of shares has changed from 10,136,952 shares to 21,000,000 shares, for the current fiscal year ending on 31 March 2022.