National Industrialization Co. (Tasnee) expected H2 2019 financial results to be similar to those recorded in the first half of the year, ahead of potential improvement in fiscal year 2020, Mutlaq Al-Morished, the company’s CEO told CNBC Arabia on Monday.
“Tasnee is likely to record better results in 2020 as the US products will be absorbed by the market with China being used to the US trade war,” Al-Morished said.
The US-China trade conflict raised concerns in the global markets, which led to weak demand for petrochemicals and lower prices.
Tasnee’s H1 2019 net profit dropped 40 percent year-on-year (YoY) to SAR 456.2 million, Argaam earlier reported.
Read: Tasnee net profit drops 40% in H1 2019
On the other hand, the company will launch trial run at its titanium sponge project this month, Al-Morished added, expecting the commercial operation to begin in Q4 2019.
“The related financial impact is likely to show in the next two-three years. It will be negative at first ahead of gradual improvement later on,” he noted.
Tasnee will produce between 8 percent and 10 percent of the world’s pure titanium production. The project will produce 15,600 tons of sponge titanium, with price per ton ranging between $8,000 and $11,000.
The company will first sell the plant’s output in raw material form.
Going forward, the output will be exported to developed countries so as to be used in various industry applications such as aircraft, satellites, nuclear submarines and other medical purposes, Al-Morished said.
Last June, Tasnee postponed the operation of its titanium sponge project to the second half of 2019, Argaam reported.
Elsewhere, Tasnee has reduced outstanding loans to SAR 15 billion from SAR 25 billion in 2014 and 2015.
The SAR 10 billion decline was attributed to Cristal’s deal that helped Tasnee repay SAR 7 billion of debts, while the remaining amount was repaid from its cash flows, he concluded.
Related: Tasnee postpones its titanium sponge project to H2 2019
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