Saudi Paper's capital hike confirms strength of financial position: CEO

Yousri Al-Bishri, CEO of Saudi Paper Manufacturing Co.

Saudi Paper Manufacturing Co.'s (SPM) decision to increase its capital gives confidence and confirms the strength of its financial position, said CEO Yousri Al-Bishri.

In a statement to CNBC Arabia, the top executive explained that the company is working to increase its capital for the third time in a short period, adding that the two previous increases were needed as the company sought liquidity after rescheduling its debts with banks to finance its expansions.

He said the situation was different with regard to the increase this time, as the company’s financial situation is currently much better and the financial results in the past years confirm this, which is evident from the increase in sales and market share. In addition, the expansions also have yielded positive results. 

The company's debt reached SAR 491 million between 2020 and 2022, of which SAR 342 million and SAR 149 million were long-term and short-term working capital, respectively. During 2023, debt worth SAR 100 million was repaid, lowering the loan amount to SAR 392 million, the CEO added.

Al-Bishri added that SAR 70 million were paid for expansion of factories, which will add 60,000 tons, and facilities worth SAR 90 million were opened to secure raw materials, especially in light of the tensions in the Red Sea.

The CEO said that the hike in interest rates last year increased the company’s burden by SAR 14 million, but it was able to absorb.

Al-Bishri added that Saudi Paper is on a solid path and statistics confirm that it is the most popular and first in terms of market share, adding it has reached the highest level of sales and profitability in its history, which will be announced soon.

The company's liquidity currently stands at SAR 137 million, while the production capacity is 130,000 tons, which is the largest in the Middle East. All factories are operating at maximum capacity and are covered by confirmed orders.

The company also has many external orders, especially after modifying the products and adding quality improvements.

A total of 60,000 tons will likely enter the company's production, which will significantly help to reduce costs and improve profitability, said the CEO, expecting very high growth rates compared to previous years.

He pointed out an increasing demand from Iraq, Yemen, Kuwait, the UAE and Qatar, indicating that the expansion of conversion factories in Kuwait has begun to bear fruit and is expected to double profit in Kuwait.

According to data available to Argaam, the Capital Market Authority approved, on Feb. 8, the company’s request to increase its capital from SAR 337 million to SAR 370.7 million through bonus share distribution.