MEPCO profits decrease to SR54.6 mln during Q3, by 16%

The Middle East Paper Manufacturing and Production Company “MEPCO” revealed that the net profit after zakat and tax in the third quarter decreased to SR54.6 million, compared to SR65 million in the same quarter of last year, at a rate of 16%.
This came after Tuesday’s announcement of the preliminary financial results for the period ending on September 30, 2022 (nine months).
The operational profit amounted to SR68.4 million in the third quarter, compared to SR70 million in the same quarter of the previous year, a decrease of 2.3%.
The net profit after zakat and tax in the 9-month period amounted to SR246.8 million, compared to SR125.8 million in the same period last year, a growth of 96%.
The gross shareholders’ equity “without minority rights” amounted to SR1.17 billion in the current period, compared to SR887.8 million in the same period last year, an increase of 32.5%.
Profits per share in the current period reached SR4.9, compared to SR2.53 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 main reason for the decrease in net profit is the increase in the selling and distribution expenses by SR 3.8 Mn, impairment of financial assets by SR 3 Mn, other expenses by SR 6 Mn, finance costs by SR 1.7 Mn and zakat expenses by SR 7.1 Mn. The increase in expenses as above was partially netted with the savings in general and administrative expenses by SR 5.2 Mn on account of a reduction in payroll costs.
Selling and distribution expenses are increased due to the increase in the logistics cost of shipping goods to export customers amid supply chain challenges and the global rise in logistics costs. Other expenses mainly comprise forex losses and increase in impairment as per the ECL model as per IFRS-9. The increase in finance costs is due to increased SAIBOR rates and zakat is increased due to an increase in zakat base as well as the increase in the provision in the Quarter avoiding any sudden increase in zakat assessment at year-end.
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 main reason for the decrease in net profit compared to the preceding quarter is the decrease in revenue by 13% mainly because of a decrease in selling prices of the Company’s products due to the global decline in prices. As a result, Gross Profit decreased by SR 39 Mn. Moreover, other expenses also increased by SR 3.4 million due to an increase in forex losses and an increase in zakat by SR 5.7 million.
The reason of the increase (decrease) in the net profit during the current period compared to the same period of the last year is:
The main reasons for the increase in net profit are an increase in revenue by 31% owing to higher demand and selling prices. As a result, GP increased by 72%.
The impact of the above is partially offset by an increase in the selling, general and administrative expenses by SR 20 Mn, allowance for impairment of trade receivables by SR 5.8 Mn, finance charges by SR 2.1 Mn, zakat expenses by SR 10.8 Mn, other expenses by SR 14.5 Mn and reduction in other income by SR 3.9 Mn. Increase in SG&A is due to increase in transportation and payroll costs. Other expenses comprise of forex loss of SR 12M and SR 2M loss on disposal of fixed assets. Also, the reduction in other income mainly pertains to SR 3 Mn from scrap sales, reduction in gain on disposal SR 2.1 million netted with forex losses of SR 1.3 Mn.The increase in Zakat expensess is due to the increase of Zakat base as well as increase the provision in the Quarter avoiding any sudden increse in zakat assasment in year end.
Certain prior period figures have been re-classified to conform with the presentation in the current period.
Subsequent to the period ended 30 September 2022, the Board passed a resolution on 8 October 2022, for declaring an interim dividend amounting to SR 25 million (SR 0.5 per share).