MEPCO expects containerboard mill to start operations by end-2027

MEPCO CEO Faisal Haddawi

Middle East Paper Co. (MEPCO) CEO Faisal Haddawi said the PM5 containerboard mill project is progressing according to plan, with commercial operations expected to commence by the end of 2027.

Meanwhile, the company expects the expansion of its TM6 tissue mill to begin operations by the end of 2026, he told Argaam.

Haddawi explained that the company reallocated around SAR 291.1 million previously earmarked for acquisitions to finance the containerboard mill project, bringing the total allocation for the project to approximately SAR 465 million.

He noted that the project is not solely aimed at adding new containerboard production capacity, but also includes the production of a new low-grammage product weighing 70 grams per square meter (GSM).

This technology would help develop the market and generate new demand in the corrugated packaging sector.

The CEO also added that the project represents a strategic step for the company and will strengthen its competitive position both locally and globally by introducing a new product while expanding its production capacity.

He noted that the project is not solely aimed at adding new containerboard production capacity, but also includes the production of a new low-grammage product weighing 70 grams per square meter (GSM).

He said this technology would help develop the market and generate new demand in the corrugated packaging sector.

He also added that the project represents a strategic step for the company and will strengthen its competitive position both locally and globally by introducing a new product while expanding its production capacity.

Haddawi said the project is progressing at a fast pace, with a significant portion of the engineering work completed and most contracts awarded.

He emphasized that reallocating part of the proceeds to the containerboard mill project does not mean the company has stopped exploring acquisition opportunities. MEPCO continues to evaluate opportunities that could create strategic value for shareholders.

He noted that the company focuses on opportunities that offer the greatest potential for value-chain integration.

In this regard, vertical integration through Waste Collection and Recycling Co. (WASCO), a wholly owned MEPCO subsidiary that supplies key raw materials for paper manufacturing, is one of the elements supporting and expanding the company's value chain.

Regarding the tissue mill expansion, Haddawi said the project will double the company's current production capacity from 60,000 tons to 120,000 tons.

The CEO noted that the mill is located in King Abdullah Economic City (KAEC) and benefits from a strategic location close to several ports, including Yanbu Port, Jeddah Port, and King Abdullah Port.

He said higher revenues, improved operational efficiency, and effective cost management contributed to the improvement in the company's results in Q2 2026.

Haddawi explained that the company was able to overcome the impact of non-recurring items on its profitability while continuing to manage costs and improve operational efficiency.

He noted that lower manufacturing costs helped increase operating profit from approximately SAR 12 million in Q2 2025 to SAR 20.3 million in Q2 2026, representing a 70% increase.

He added that the company also worked to optimize its marketing and sales mix to capitalize on its diverse product portfolio and expansion into new markets, while maintaining its position in the domestic market.

The company's flexibility in fulfilling orders and switching between products enables it to meet customer requirements on time while maintaining cost efficiency and profit margins.

Haddawi said the company's revenue increased by 8% in Q2 2026 compared to Q2 2025, noting that the sales and marketing mix was the primary driver of revenue growth.

He added that revenue from the domestic market increased by 23% in Q2 2026 compared with Q2 2025.

Regarding conditions in the paper market, Haddawi said the company is working to make its cost management and supply chain practices sustainable solutions for addressing various challenges, including geopolitical developments in the region.

He explained that the company is working to mitigate the potential impact of these developments, develop alternatives and strengthen its supply chains, while integrating its value chain across global and local markets and suppliers.

He added that the company uses artificial intelligence (AI) technologies and modern tools to enhance its commercial platform, enabling it to make more efficient decisions regarding raw material procurement and inventory management.

According to data available with Argaam, MEPCO reported a net profit of SAR 15.3 million in Q2 2026, compared to SAR 5.2 million a year earlier.