Saudi Pipes profits increase to 17 mln during Q3, by 5.5%

The net profit after zakat and tax for the Saudi Steel Pipe Company “Saudi Pipes” rose to SR17 million during the third quarter, compared to SR16 million in the same quarter of last year, at a rate of 5.5%.
This came after the announcement on Sunday of the preliminary financial results for the period ending on September 30, 2022. (9 months).
The operational profit amounted to SR21 million in the third quarter, compared to a loss of SR0.69 million in the same quarter of the previous year.
The gross profit amounted toSR30.4 million in the third quarter, compared to SR7.6 million in the same quarter of the previous year, an increase of 3001%.
The net profit after zakat and tax in the 9-month period amounted to SR43 million, compared to a loss of SR0.46 million in the same period last year.
Profits per share in the current period amounted to SR0.85, compared to a loss of SR0.01 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 reason for recording a net profit of SR 10 MM for the third quarter of 2022 compared to a net loss of SR (16.8) MM for the same quarter of 2021 is due to: Increase in the company’s sales for the current quarter of 2022 by around 89% to reach SR 175.4 MM compared to SR 92.6 MM for the same period in 2021. The reasons for this are:
1- The company started to deliver to the client the pipes for the new orders that have been recently awarded to the company.
2- Stability of production and delivery for both factories (Riyadh and Jubail) during the quarter, which helped to increase the sales and reduce the cost of production.
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 net profit for the current quarter is SR 10 MM, compared to losses of around at (4.2) MM for the previous quarter. The reason for the profits this quarter is the increase in sales , improvement in gross profit decrease in G&A in this period compared to the previous quarter.
The reason for the increase (decrease) in the net profit during the current period compared to the same period of the last year is:
The reason for the decrease in net losses for this period in 2022 to reach SR (7.5) MM compared to losses around SR (29) MM for the same period in 2021 to decrease in cost of sales margin and selling and distribution expenses compared to the same period of the last year.
Basis for Qualified Conclusion:
As at September 30, 2022, the Company’s current liabilities exceeded its current assets by SR 205,2 million (31 December 2021: SR 222.2 million), also the Company has negative cash flows from operating activities amounted to SR 82,9 million as at September 30, 2022. These conditions indicate the existence of a material uncertainty that may cast doubt over the Company’s ability to continue as a going concern.
– The Company has obtained approval of Capital Market Authority dated March 17, 2022, for increase the share capital through right-issue of SR 300 million. However, the request of the increase in share capital was rejected by the majority shareholders.
– On July 17, 2022, the Board at Directors issued a recommendation to increase the capital by an amount of SR 150 million, this recommendation is subject to the approval of the relevant regulatory authorities and the extraordinary general assembly that has not held until the date of approval of the accompanying interim condensed financial statements by the company’s board of directors
Conclusion:
Based on our review, with the exception of the matter described in the above paragraph, nothing has come to our attention that causes us to believe that the accompanying interim condensed financial statements are not prepared, in all material respects, in accordance with IAS 34 as endorsed in the Kingdom of Saudi Arabia.
Certain figures for the comparative period have been reclassified to conform to the presentation for the current period.
– Sales increased in the third quarter of 2022 by 89% compared to the same period in 2021 to reach SR 175.4 MM , compared to SR 92.6 MM and the net profit for the third quarter of 2022 was SR 10 MM compared to a loss of around SR (16.8) MM for the same period in 2021.
– Accumulated losses as of September 30, 2022 amounted to SR (0.9) MM compared to SR (411.2) MM at the end of the year 2021.
– Gross equity (there are no minority rights) during the current period reached SR 98.2 MM compared to SR 105.7 MM at the end of 2021.
– At the end of 2021 until now, the company has been awarded several projects with a total value of more than SR 1 billion. The impact of these projects begins during this quarter, when the company starts to produce and deliver the pipes to the clients of these projects which improve the sales and the gross profit of this quarter.