Saudi Industrial profit down 44% to SR284 mln in 2Q

Saudi Industrial Investment Group announced that its profits after zakat and tax declined 43.7% to SR 284million in the second quarter of 2022 compared to SR 505 million during the same period of 2021.

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

The company’s operational profits fell 59.7% to SR 299 million in the 2^nd quarter of the current year from SR 742 million in the same period of the previous year.

Net Profits of Saudi Industrial over the first half of 2022 were down 36% to SR 519 million from SR 811 million a year ago, while the profit per share fell to SR 0.69 from SR 1.8.

The reason for the decrease in net income during the current quarter compared to the same quarter of the previous year

1. SIIG’s share of profit of the jointly managed projects has decreased in the current quarter, due to an increase in the feedstock costs.
2. An increase in the Zakat expenses as petrochem has reversed zakat provisions relating to previous years during the same quarter of the previous year.
3. An increase in the general and administrative expenses.

The reasons for the increase in the net income during the current quarter compared with the previous quarter are:

1. An increase in SIIG’s share of profit in Petrochem, after acquiring the company 100%, during the current quarter, although there is a decrease in the average selling prices of Petrochem’s JV’s products.

The reasons for the decrease in the net income during the current period compared with the same period in the previous year are:

1. SIIG’s share of profit of the jointly managed projects has decreased in the current period, due to an increase in the feedstock costs.

1. An increase in the Zakat expenses as petrochem has reversed zakat provisions relating to previous years during the same period of the previous year.
2. An increase in the general and administrative expenses.

We draw attention to Note 14 to the accompanying condensed consolidated interim financial statements, which sets out the impact of restatement on investments in Saudi Polymers Company (“SPCO”) and Gulf Polymers Distribution Company (“GPDC”) that were previously consolidated by the Company’s subsidiary, National Petrochemical Company (“Petrochem”). Based on Petrochem’s reassessment of its contractual arrangements with the respective shareholders of SPCO and GPDC, these investments should have been accounted for as investments in joint ventures using the equity method as Petrochem exercised joint control over these investments.

Note 14 to the accompanying condensed consolidated interim financial statements sets out:

– the impact of this restatement to the respective 2021 comparative periods of these condensed

consolidated interim financial statements; and

– that the restatement had no impact on the total equity attributable to the shareholders of the

Company, net income, and earnings per share (basic and diluted).

Additional Information:

– Starting from the issued financial statement for the period ended 30-6-2022, SIIG’s ownership at petrochem is 100%.

Reference to the announcement of the National Petrochemical Company “Petrochem” on its financial results for the period ending on 31-12-2021, and its disclosure of a change in the presentation of its financial statements, as it will stop consolidating its financial statements with the Saudi Polymers Company and the Gulf Polymers Distribution Company, and it will presents its investments in the mentioned company by the equity method, and based on the above, Saudi industrial investment group “SIIG” would like to clarify that it consolidates its financial statements with Petrochem, and therefore the change that Petrochem has made to its financial statement, has led SIIG to change the way it presents its financial statements as well, and this change will not affect by anyway the equity of SIIG’s shareholders, or the net profits and earnings per share.