Turnaround plan lifts Saudi Paper's Q1 profit, says CEO

Saudi Paper Manufacturing Co.'s (SPMC) net profit was bolstered by last year's broad turnaround program, which paid off in Q1 2018, driving up sales by 32 percent when compared to the previous quarter, chief executive officer Hassan Asiree told Argaam in an exclusive Wednesday.

The company restructured its manufacturing and production units, appointed new executives and developed new strategies, which focused mainly on high-quality products; changing selling and pricing policies; and developing distribution services along with accessing new markets.

"We've restructured distribution services to cover untapped areas, so as to increase our distribution points and penetration rate. Our offices in the Eastern region, Riyadh and Jeddah cities led to a significant rise in our sales," Asiree said.

"SPMC has outperformed the sector and will maintain growth in the short term through focusing on the new strategy," he added.

SPMC's profit margins have been long impacted by its low pricing policy and fierce competition.

A new brand was launched, with various products provided to meet market demand.

For expansions in Riyadh's paper recycling plant, he added that SPMC had earlier halted recycling lines on its 25,000 square meter plot of land. The company is considering whether to utilize this land or sell it and buy a smaller one for the target expansion.

The paper manufacturer is likely to boost the plant's production capacity by 60,000 tons annually by the end of Q3 2018.

Asiree added that SPMC's Moroccan and Turkish plants have been suspended ahead of the first quarter to cut losses. Both units, which are operating in unpromising markets, had no impact on the company's first-quarter net profit.

SPMC's 85 percent-owned Al Jothoor Facial Tissues Paper Factory in Kuwait maintains profit, thanks to garnering a strong market share in the Kuwaiti market.

The Saudi paper manufacturer is mulling to buy a new industrial plot of land for the factory expansions in Q2 2018.

Meanwhile, SPMC will complete the paperwork required for capital reduction in the next few weeks and will invite shareholders to vote on the process upon getting the market regulator nod, Asiree added.

SPMC swung to a net profit of SAR 4.7 million for the first quarter of 2018 versus a net loss of SAR 6.3 million a year earlier.