SASCO’s 2017 profit ‘fair’ amid market challenges, says CEO

Saudi Automotive Services Co.’s (SASCO) 2017 financial results are “fair”, if market challenges are taken into account amid stable profit margins on fuel, higher power and energy tariffs, Riyadh Almalik, the company’s chief executive, told Argaam on Monday in an exclusive.

In addition, the lack of skilled labor for operating the company’s sites and higher labor costs also weighed on SASCO, leading it to put its expansion plans on hold.

Fuel prices will impact the company’s sales as fuel operating revenue will rise on higher product selling prices. Operating expenses will also increase, due to a rise in fuel purchase prices.

Though fuel profit margins have remained unchanged, margins of Gasoline 91 dropped to 6.92 percent from 12 percent, while the margins of Gasoline 95 almost halved to 4.64 percent from 10 percent, Almalik said.

“Profit margins remained unchanged despite hiking fuel costs in 2015 and early 2018. A few years ago, the company has been urging the competent authorities to reconsider an increase in fuel profit margins. SASCO hopes that a rise in fuel profit margins will contribute to enhancing operating efficiency, and developing its stations and rest houses,” Almalik added.

Meanwhile, SASCO took certain measures, as recommended by its board of directors, to control the impact of such variables on its financial statements, such as rationalizing expenditures, capitalizing on state-of-the-art technology and improving property revenue.

Almalik added that he expects some firms to bow out from competition, which will boost SASCO’s market share.

SASCO reported a net profit of SAR 29.9 million for fiscal year 2017, a 15 percent year-on-year increase.