Tasnee 2018 net profit lifted by higher titanium dioxide prices, says Falcom

National Industrialization Co.’s (Tasnee) net profit jumped 67.9 percent year-on-year (YoY) to SAR 1.2 billion in fiscal year 2018, mainly due to increase in average sales prices of titanium dioxide (TiO2) products and higher share of net profit from joint ventures and associates.

Revenue increased 6 percent YoY to SAR 11.4 billion for the year, driven by higher sales prices of TiO2.

For the fourth quarter of 2018, revenues declined 5.6 percent YoY and 6 percent quarter-on-quarter to SAR 2.7 billion as petrochemical prices took a downturn, losing most of the gains during the year.

“The company has reduced the production of TiO2 to balance the market and maintain a reasonable price level,” Falcom Financial Services said in an earnings review.

Gross profit jumped 45.4 percent YoY to SAR 3.1 billion in FY18, while gross margin expanded to 26.7 percent for the year from 19.5 percent in 2017.

Operating profit advanced 69.2 percent YoY to SAR 2.7 billion. Operating margin expanded 898bps YoY to 24 percent.

Finance charges remained almost unchanged at SAR 706 million in 2018, while total debt declined to SAR 14.5 billion from SAR 15.6 billion a year earlier.

“Tasnee has utilized the upturn in business cycle and continues to decrease debt. This should ultimately reflect in lower financial cost, further helping profitability,” the report said.

Net profit margin expanded 387bps YoY to 10.5 percent in 2018.

Falcom revised its rating for the stock to “Overweight” with a target price of SAR 18.5 per share.