FY 2021 | Earnings Release
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2021: THE YEAR OF RECORDS
REVENUES AND NET INCOME; HIT ALL-TIME HIGHS
2021 Revenue crosses SR 1 bn, Gross Profit Margin soars to 37.3%, and Net Income records SR 220.7m
Jeddah, Saudi Arabia | 17 March 2022 | The Middle East Paper Co. (‘MEPCO’), the region’s leading vertically integrated paper manufacturer, announced its Q4/FY 2021 results, breaking most of its financial and operational historical metrics. This year’s record-breaking performance is attributed to MEPCO’s ability to capture the benefit of high international prices, efficient management of resources, and successful cost rationalization tactics.
Highlights
• Production – recorded 425,000 tons for the year. MEPCO achieved this production level due to several successful operating efficiency initiatives that were defined during the reformulation of its 5-year strategic growth plan in 2020. Although this production level is relatively flat compared to 2020, MEPCO believes it can further increase production in year 2022.
• Sales revenue – crossed SR 1 billion on the back of increasing international prices to reach the highest recorded levels in 5 years. Although prices are set at the international level;
MEPCO was able to capture the full spectrum of these increases by ensuring a streamlined production process, minimize downtime, and a disciplined dispatch process.
• Gross profit – cost control, and stabilizing fiber prices had a direct impact on achieving the record-high gross profit margins of 44.9% and 37.3%, for the fourth quarter of 2021 and the year, respectively.
• EBIT – recorded SR 99.4m for Q4’21 and 242.3m for the year. As MEPCO needed to fuel its growth, it invested in a wide range of services; most importantly, human capital. It is worthy to note that despite the international increase in freight cost, MEPCO was able to maintain the inflation on sales and distribution costs within reasonable limits.
• Net income (attributable to parent) – as a direct result of the above, as well as reducing the financing liabilities of the group through consolidation and timely debt repayment; net income reached a historical high of SR 220.7 million for the year, while the fourth quarter recorded SR 94.9 million, marking it as the highest single quarterly net income in the life of the company.
FY 2021 | Earnings Release
Page 2 of 5 Eng. Abdullah AlMoammar, Chairman, commented: “No words can describe how I feel about this success. Our history, market and industry knowledge, and heavy investments in infrastructure;
enabled us to capitalize on this lucrative market situation. The release of such impressive financial results comes at times of global economic and political turmoil, but MEPCO is still positioned to grow, and realize its vision of becoming the region’s largest, most diverse, and integrated paper manufacturer.
Year 2021 results were sure to impress and exceed all expectations. We delivered maximum returns to our shareholders this year and aspire to continue this trend going forward through investing in strategic growth initiatives on the vertical and horizontal dimensions.
Following the successful publication of our first Sustainability report in Q4 2021, we are focusing our efforts this year on formulating the group’s overall ESG strategy, which willdefine the grounds of sustainability practices to be applied in our business model, covering all operational units”.
Eng. Sami Al Safran, President, commented: “We are proud, not only for reporting such an impressive set of results, but for seeing the realization of our expectations, and how we managed this global upward trend. Until the date of this release, we see a continuation of our strong performance in Q4 of 2021 into this year as prices continued to hold its ground in the first few months of 2022. The current political and economic events in Europe give a further boost to
commodities at large. We are still pushing through the year with stable performance, which follows 2021 trends.
We are focusing our efforts and resources this year on strengthening the foundations of future growth. The foundation of MEPCO’s success lies in its human capital. Investing in manpower by growing, and attracting talent. In this context, we have incorporated a comprehensive succession plan that is at the center of our 5-year growth strategy to ensure business stability and delivery of growth initiatives in the highest standards possible.
Our tissue expansion project in King Abdullah Economic City (KAEC) is progressing according to schedule. We are committed to starting commercial production in Q1 2023, as previously communicated.
The newly formed joint venture with Jeddah Municipality “ESTIDAMA” has reached an important critical mass milestone in monthly collections of recyclable materials. As the pilot project gains ground each day, we look forward to a full national roll-out of this model in the years to follow.
The expansion projects into tissue jumbo roll production and growing our waste management footprint through ESTIDAMA, form the foundation of MEPCO’s growth strategy. We are confident that our strategy will yield maximum returns to shareholders on the medium and long-terms”.
FY 2021 | Earnings Release
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Sales Highlights
Sales breakdown
1by value in (SAR)
1 Refers to MEPCO standalone sales.
42.3%
57.7%
Local vs. Export Sales (%) FY 2020
Export sales Local sales
40.2%
59.8%
Local vs. Export Sales (%) FY 2021
Export sales Local sales
22.4%
77.6%
Sales by Product Class (%) FY 2020
Non-conventional Conventional
31.4%
68.6%
Sales by Product Class (%) FY 2021
Non-conventional Conventional
FY 2021 | Earnings Release
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Financial Review
For the financial year ended 31 December 2021; all figures are in SAR ‘000, unless stated otherwise.
Previous
Quarter Current
Quarter QoQ Change
Previous
Period Current
Period
YoY
Change
Q3 21
Q4 21
FY 20FY 21
Sales Revenue 279,484
326,949 17.0%
724,6851,057,400 45.9%
Gross Profit 115,942
146,860 26.7%
143,249394,102 175.1%
Gross Profit %
41.5% 44.9% 3.4 bps 19.8% 37.3% 17.5 bps
EBITDA 94,052
123,448 31.3%
149,495341,372 128.4%
EBITDA %
33.7% 37.8% 4.1 bps 20.6% 32.3% 11.7 bps
EBIT 70,090
99,356 41.8%
43,592242,318 455.9%
EBIT %
25.1% 30.4% 5.3 bps 6.0% 22.9% 16.9 bps
Net Income 65,044
94,859 45.8%
20,176220,710 993.9%
Net Income %
23.3% 29.0% 5.7 bps 2.8% 20.9% 18.1 bps
Earnings Per Share (SAR) 1.31
1.91 0.60
0.414.43 4.02
bps=basis points
Sales Revenues, Gross Profit, EBIT, and Net Profit Trends | QoQ and YoY
17.0%
45.9%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0 200 400 600 800 1,000 1,200
Q3 21 Q4 21 FY 20 FY 21
SR Millions
Sales Revenues
41.5% 44.9%
19.8%
37.3%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0 50 100 150 200 250 300 350 400 450
Q3 21 Q4 21 FY 20 FY 21
SR Millions
Gross Profit & Margin
25.1%
30.4%
6.0%
22.9%
0%
5%
10%
15%
20%
25%
30%
35%
0 50 100 150 200 250 300
Q3 21 Q4 21 FY 20 FY 21
SR Millions
EBIT & Margin
23.3%
29.0%
2.8%
20.9%
0%
5%
10%
15%
20%
25%
30%
35%
0 50 100 150 200 250
Q3 21 Q4 21 FY 20 FY 21
SR Millions
Net Income & Margin
FY 2021 | Earnings Release
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Debt Structure
As of 31 December 2021 (SAR
‘000)
-Ends-
About MEPCO
MEPCO is the leading, vertically integrated paper manufacturer in the Middle East, offering a diverse range of containerboard and specialty paper products for the packaging, construction, furniture, and paper core industries worldwide. MEPCO supplies its products to the local Saudi market, GCC countries. Its growing global footprint spans over 40 countries, including across South Asia, the Americas and Europe.
The company’s innovative approach, including energy and water-efficient production; enables it to deliver significant environmental and economic benefits. Through its wholly owned subsidiary, WASCO, MEPCO sources raw material from across the Kingdom and neighboring countries, ensuring a secure supply while providing measurable value to the Saudi economy.
MEPCO is listed on the Saudi Stock Exchange under Tadawul symbol ‘MEPCO’. For more information, visit www.mepco.biz.
Investor Relations contacts Bassem ElShawy
Head of Strategy and Business Development Email: [email protected]
Phone: +966 12 6380111 IR website
Dec-21 Dec-20 Change (SAR) Change %
STL* 97,349 86,297 11,052 12.8%
MTL** 561,761 496,381 65,380 13.2%
Total debt 659,110 582,678 76,432 13.1%
Cash Balance 264,004 45,455 218,549 480.8%
Net debt 395,106 537,223 -142,117 -26.5%
Equity *** 982,896 751,993 230,903 30.7%
Debt/Equity (x) 0.67 0.77 (0.10) -
Net debt/Equity (x) 0.40 0.71 (0.31) -
* STL includes Notes Payable liability against import bills.
** MTL includes Current Portion of Term Loans.
*** Total Equity including Non-Controlling Interest with value of SR 206.6 thousand.
