Saudi Steel Pipe widens H1 2020 losses to SAR 44.8 mln

Saudi Steel Pipe Co. widened net losses after Zakat and tax to SAR 44.8 million for the first half of 2020, compared to net losses of SAR 9.8 million a year earlier.

The losses were attributed to gross loss of SAR 7.89 million due to lower volumes and product mix.

The company also cited other reasons for net losses including SAR 31.36 million higher administrative expenses, SAR 0.16 million lower other income, SAR 1.97 million rise in trade receivables impairment charges, and lower share of profit from an affiliate (Global Pipes Co.).

This was offset by lower sales, marketing and distribution expenses, higher net Zakat and income tax benefit, as well as lower financial charges.

The company said the results have been impacted by the effects of COVID-19 pandemic. In particular, , the lockdown imposed on Qatif and Dammam Industrial City II (where the company’s facilities are located) during April and May 2020 and the resulting restrictions imposed on the mobility of workforce and on the activity in the industrial facilities, had a significant impact on the company’s operation.

However, at the time of issuing these financial statements, the company’s industrial facilities are back in operation at pre-COVID-19 normal levels.

In Q2, the company reported net loss after Zakat and tax of SAR 27 million, compared to net losses of SAR 10.17 million a year earlier, due to gross loss of SAR 12.38 million, higher administrative expenses, lower other income, and higher trade receivables impairment charges.

This was partially offset by higher share of profit from an affiliate (Global Pipes Co.) and lower sales, marketing and distribution expenses.

The company said it implemented several measures to optimize structural costs and preserve cash in order to mitigate the impact of the expected lower sales and production caused by the COVID-19 pandemic. This included focusing on reducing working capital and capital expenditures without compromising the long-term strategic goals of the company.

When compared to previous quarter, the company’s net losses widened by 52% on gross loss of SAR 12.38 million, lower net Zakat and income tax benefit, and higher trade receivables impairment charges.