Saudi Cable Co. is expected to see a strong performance recovery and turn to operating profit over the next 18 months, CEO Meyasser Nowailati told Argaam in an exclusive on Wednesday.
“The company entered a new phase in Q2 2020, after rescheduling its last debt. It also resumed solid production after ensuring required liquidity for purchasing raw materials,” Nowailati said.
The factory renovation works are likely to continue. Saudi Cable is close to securing new bank facilities, which will allow it to raise working capital. The new facilities will also provide the cable producer with better options for raw materials, to improve production and boost profit margins in the remaining period of the year.
Saudi Cable’s restructuring plan, which has been put into effect since early 2018, aims mainly to regain the company’s leading position.
Upon completing this plan likely in the beginning of 2021, the company will swing to healthy profit amid better production and sales, Nowailati stressed.
On the other hand, the company incurred losses in Q1 2020 due to financing difficulties and low working capital, which hindered production, sales volumes and operating profit.
The company was also hit by some liabilities and fixed costs that weighed on profitability.
“The increase in working capital will reflect positively on production rates from Q2 2020 onwards,” Nowailati further explained, noting that the first quarter balance sheet implied a significant growth in inventory and advance payments to suppliers.
Speaking about the COVID-19 financial impact on the cable producer, Nowailati said that the factory was not closed, and production plans were rather rescheduled in line with the measures adopted by the Kingdom to combat the pandemic.
The company has adapted to the current conditions, especially that the crisis coincided with an increase in production and capital hike proceeds.
“The COVID-19 pandemic is expected to have a limited impact on the company,” Nowailati concluded.
The cable manufacturer widened Q1 2020 net losses to SAR 43.2 million, from SAR 32.1 million in Q1 2019, Argaam earlier reported.
Saudi Cable increased capital from SAR 110.6 million to SAR 360.6 million this year through a SAR 250 million rights issue.
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