‎“Sipchem” profits down slightly to SR3.59 bln during 2022, by ‎‎0.1%‎

The net profit after zakat and tax of the Sahara International Petrochemical Company “Sipchem” decreased slightly to 3.595 billion riyals during the year 2022 AD, compared to 3.591 billion riyals in the year 2021 AD, at a rate of 0.1%. This came after today’s announcement of the annual financial results ending in 12-31-2022.

The operational profit amounted to 4.04 billion riyals during the year ending in 2022, compared to 4.3 billion riyals in the previous year, a decline of 6%.

The total profit amounted to 4.83 billion riyals in the current year, compared to 5.34 riyals in the previous year, with a decrease of 9%.

Earnings per share in the current year amounted to 4.96 riyals, compared to 4.94 riyals in the previous year.

The net profit increased during the year 2022 by only 0.1% compared to the year 2021 AD, and this is due to:

– The increase in sales of the company’s products as a result of increasing the efficiency and reliability of the factories. Despite the decrease in profit margins as a result of the decrease in product prices and the increase in the prices of some raw materials

– Decrease in financing costs as a result of decreasing the debt ratio as well as reducing general and administrative expenses and decreasing zakat expense.

– It should be noted that during the previous year, a decrease was recorded in the value of a cash-generating unit in the amount of 160 million Saudi riyals for the polybutylene terephthalate plant when compared to the current year with the year 2021.

The company said that during the year 2022, the decrease in the value of non-financial assets related to the year 2021 was reclassified by an amount of 160 million Saudi riyals from the item “other revenues / (expenses), net” to a separate item in the consolidated statement of profit or loss, in order to display more favorable to operating profit.

– The company owns 50% of the ownership of the Gulf Advanced Cable Insulation Company. During the year 2022, the company reassessed its position regarding its control over the operations of Gulf Advanced Cable Insulation Company in accordance with International Financial Reporting Standard (11) “Joint Arrangements”, and accordingly, the investment in Gulf Advanced Cable Insulation Company was accounted for during the year 2022 According to the equity method, the company’s financial statements for the year 2021 were also amended based on the re-evaluation and accounting for the investment in Gulf Advanced Cable Insulation Company according to the equity method. Knowing that during the year 2021, production operations were stopped at the Gulf Advanced Cable Insulation Company, in continuation of the company’s strategic decisions aimed at improving profitability and raising performance efficiency, as previously announced.

– During the year 2022, the company reclassified shipping and handling expenses amounting to 222.6 million Saudi riyals from the item “selling and distribution expenses” to a deduction from the item “revenues”. These expenses relate to operations in which the company, according to shipping contracts, is responsible for shipments of products after transferring ownership of the goods to customers.

– Re-presenting the provision for precious metals (which are used in production operations) from the item of accrued expenses and other current liabilities to a separate item in the consolidated statement of financial position.

Additional information:

1. The company was able to reduce long-term loans by the end of 2022 by an amount of 2.04 billion Saudi riyals compared to the end of 2021. As a result, the debt-to-equity ratio decreased from 34% in 2021 to 20% in 2022.
2. The company distributed dividends to shareholders during the year 2022 amounted to 2,358.6 million Saudi riyals, equivalent to 3.25 Saudi riyals per share, which is the highest in the company’s history and an increase of 722.5 million Saudi riyals compared to the distributions during the previous year.
3. The net profits recorded in 2022 are the highest achieved since the company was established.