SACO’s CEO says shipping cost up 50% in Q3 2021, market share nears 7%

SACO’s CEO Haytham Al-Hamidi

Saudi Company for Hardware’s (SACO) Q3 2021 net profit was hit by a 50% year-on-year (YoY) increase in shipping costs during the three-month period, Chief Executive Officer (CEO) Haytham Al-Hamidi told Argaam in a telephone interview.

Shipping costs increased by 400% compared to Q3 2020, he noted.

SACO is working on several options to maintain the profit margin, amid exceptional shipping conditions. These include the reviewing prices of commodities most affected by increased shipping costs, while maintaining the company’s strategic pricing policy and taking into account offering competitive prices.

Among other options, the hardware company is seeking to increase the number and variety of private-label products, and improve trade conditions with its strategic suppliers to benefit all parties and clients.

Al-Hamidi added that SACO’s strategic inventory is generally “strong”, but there is some delay when receiving certain seasonal goods from suppliers or manufacturers due to the shipping crisis, etc., which in turn impacts sales.

SACO impaired the asset value of low-performing branches, as part of its compliance with the related accounting standards and transparency. This

aims to create better profitability opportunities in the future, regardless of whether these branches continue operations.

The company’s market share is estimated at 5% to 7%, Al-Hamidi concluded.

SACO’s net profit after Zakat and tax declined 74% to SAR 16.2 million in the first nine months of 2021, from SAR 61.3 million in the same period a year ago. It incurred a net loss of SAR 13.9 million in Q3 2021.