‎“Fipco” profits jumped 275% during Q1, to SR1.5 million‎

The net profit after zakat and tax for the packaging materials manufacturing company “Fipco” jumped to 1.5 million riyals during the first quarter, compared to 0.4 million riyals in the same quarter of last year, by 275%. This came after today’s announcement of the preliminary financial results for the period ending in 2023-03-31 ( 3 months).

The operational profit amounted to 3.8 million riyals in the first quarter, compared to 0.7 million riyals in the same quarter of the previous year, an increase of 443%.

As for the total profit, it amounted to 11 million riyals in the first quarter, compared to 9 million riyals in the same quarter of the previous year, with a growth of 23%.

Earnings per share in the current period amounted to 0.13 riyals, compared to 0.03 riyals in the same period last year.

The reason for the net profits achieved during the first quarter of the fiscal year 2023 compared to the net profits achieved during the first quarter of the fiscal year 2022 is mainly due to:

1- The increase in gross profit as a result of the increase in sales and the improvement of profit margins in the subsidiary company.

2- A decrease in the provision for expected credit losses

3- An increase in other revenues as a result of the company obtaining government support amounts during the period in addition to profits from bank deposits.

These results came in spite of:

1- High general and administrative expenses

2- The increase in financing costs as a result of the end of government initiatives launched by the state to mitigate the effects of the emerging Corona virus, related to postponing the payment of installments due from loans without financing interest, in addition to the high interest rates on borrowing, despite the company’s repayment of some loans Non-due short-term with variable interest rates by the end of the year 2022 AD.

3- Decrease in profits from financial investments at fair value through profit or loss, as those investments were exited during the period.

The reason for the decrease in net profits achieved during the first quarter of the fiscal year 2023 compared to the previous quarter is mainly due to:

1- A slight decrease in the gross profit as a result of the variation in the sales mix and the reduction of profit margins for some products for reasons of competition.

2- An increase in the provision for expected credit losses

3- The change in the obligation to purchase the ownership rights of the non-controlling interest during the fourth quarter of the year 2022 AD.

4- Decrease in other revenues

5- Increased zakat provision

This is despite:

1- Decrease in selling and marketing expenses as a result of lower shipping costs.

2- The increase in general and administrative expenses as a result of the formation of provisions during the fourth quarter of the fiscal year 2022 AD.

3- Low financing costs

The company said that some balances for the comparative period were reclassified to conform to the presentation for the current period, which mainly appeared in sales numbers, cost of sales and other revenues during the first quarter of the fiscal year 2023 AD.