MEPCO delays startup of 2 projects

The company said in a statement on Tadawul that pilot and commercial production at the containerboard mill is expected to begin in Q1 2028, instead of the previous target of Q4 2027.

The updated estimated cost of the containerboard project increased to SAR 1.88 billion, from the previously estimated SAR 1.78 billion, representing a 5.7% increase.

The company attributed the higher estimated cost to increased civil construction costs, enhanced energy and steam solutions, and higher global shipping and logistics costs. As a result, the updated expected internal rate of return (IRR) is estimated at 12%.

The delay from the previously announced timeline was attributed to supply chain disruptions caused by surrounding geopolitical conditions. The delay is expected to postpone the positive impact of the project's commercial production on the company's financial statements.

The company expects the additional financial impact to be reflected in earnings before interest, taxes, depreciation and amortization (EBITDA) once operations begin.

Regarding the sixth tissue paper production line, MEPCO said pilot and commercial production are expected to begin in Q1 2027, instead of Q3 2026 for pilot production and Q4 2026 for commercial production.

The company attributed the delay to supply chain disruptions resulting from the surrounding geopolitical conditions, noting that this will postpone the positive impact of commercial production on its financial statements. However, the commercial production of the project is expected to have a positive impact on the company's financial statements.

There is no change in the project's associated costs from those previously announced, the company said, adding that any differences, if any, will be explained at the time.

According to data available on Argaam, MEPCO announced in April 2024 the launch of its PM5 project, with a production capacity of 450,000 tons. The feasibility study was completed and the project's final budget was approved at approximately SAR 1.78 billion.

In August 2024, MEPCO board approved a project to double the production capacity of its subsidiary Juthor by adding a new tissue paper machine, TM6, at a total cost of SAR 345 million.