Logo of Nama Chemicals Co.
Nama Chemicals Co. is expected to write off its accumulated losses by the end of 2021, CEO Abdullah Al-Salem told CNBC Arabia.
This will be driven by the company and markets ability to maintain performance at the same level of Q1 2020, the CEO said, expecting to sustain the levels until the end of the third quarter of 2021.
Al-Salem indicated that the company’s swing to profitability in the first quarter of 2021 resulted from continued work over two years and improvement in the market conditions, which increased sales prices for most of the company’s products, particularly “Epoxy” gaining more than 50%.
In late March, the petrochemical producer witnessed a shortage of raw materials and is currently working to overcome this challenge by working seriously with suppliers to enter into long-term contracts to avoid market fluctuations. This will contribute to avoiding the risks of the spot markets.
When asked about the reasons for setting aside provisions, Al-Salem said the company allocated provisions in April, which should reach SAR 1.7 million at the end of the first quarter as per the accounting standards.
Elsewhere, the CEO said that the loan amount from the Saudi Industrial Development Fund (SIDF) stood at SAR 591 million, accounting for the most significant portion of the company’s loans.
The Tadawul-listed firm stopped paying its dues to the fund since 2014 and is currently working with it to complete signing the agreements after the rescheduling process.
The CEO pointed out that Nama is looking for opportunities in the “Shareek” program but has not set any specific plans in this regard.
“However, any relevant step would not be taken in the near future, as the company focuses on turning profitable and avoiding previous problems, whether at the operational or financial levels. We will then go ahead with our expansion plans over the coming three years,” Al-Salem noted.
Nama reported net profit after Zakat and tax of SAR 10 million for Q1 2021, versus net losses of SAR 7.33 million in the year-earlier period, according to data compiled by Argaam.
The company’s accumulated losses stood at SAR 36.99 million, representing 15.73% of capital at the end of Q1 2021.
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