عضو مجلس إدارة مبكو السعودية لـ CNBC عربية: الطاقة الإنتاجية لمبكو في ورق التعبئة والتغليف 400 ألف طن
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00:00 Thank you.
00:01 Welcome to our viewers.
00:02 We are in a continuous broadcast of the Future Initiative for the Conflicted Investment
00:09 in the capital of Saudi Arabia, the seventh round and the second day.
00:14 We are happy to meet Mr. Rakan Abunian, a member of the board of directors of MEPCO.
00:20 Welcome, Mr. Rakan.
00:21 Good morning.
00:22 Let me start with you, the most important thing is the signing of the agreement with
00:26 the General Investment Fund, the signing of a new contract with almost 20 million shares.
00:31 If you could tell us about the details of this agreement, what is the size of this contract?
00:36 Today, the entry of an investor like the General Investment Fund confirms the company's ability
00:42 to achieve its expansionary strategy.
00:45 The amount of the contract as it was announced is 630 million, it will be invested in the company.
00:50 It is the first deal of its kind in the Saudi market, which is a deal to increase capital
00:58 without priority rights.
01:00 Is there a plan or a clear strategy for how this 630 million will be exploited?
01:06 Yes, today we announced the filing of the financial market authority, and God willing,
01:12 after the approval, the details of the use of 630 million will be announced.
01:17 In general, will it be for the financing of labor capital, acquisitions, new production lines?
01:24 Of course, it will be used for expansionary matters in general, and it will be announced
01:31 by the publication of the issues, God willing, immediately in accordance with the financial
01:35 market authority on the file.
01:36 Let's talk about the details of your results.
01:38 In the first half, the company achieved losses of approximately 26.7 million Riyals, and
01:43 you mentioned that this is due to the reference of the values, i.e. the sales prices and volumes.
01:50 When do you expect the company to regain its profitability?
01:53 Of course, today, as you know, the drop in paper prices affected the company's results in 2023.
01:59 In 2022, the paper prices were in a record number, which led to the company to record the highest
02:05 net profit in 2022.
02:07 So, it is expected that with the drop in paper prices, the company's profitability has been
02:13 affected.
02:14 In the future, we hope to reduce the impact of the drop in paper prices on the company's
02:20 results by investing in other products and also expanding, as vertical integration, to reduce
02:26 the impact of the drop in the company's results.
02:29 Today, we launched the production of paper towels, which is another product.
02:35 This will also reduce the impact of the drop in paper prices on the company's results.
02:41 If you give us a time frame, for example, the results of the third quarter and the fourth
02:47 quarter at the beginning of the year, when do you expect the company to regain its profitability?
02:52 Of course, the first half, the paper prices were in a decline.
03:00 Of course, when the market starts to stabilize, God willing, it will return.
03:05 But at the moment, we are working on limiting the drop in paper prices on the company's
03:11 results through an expansionary strategy in other production lines and also, God willing,
03:17 through vertical integration, which will help us achieve sustainable profitability.
03:22 Is there also a strategy to reduce expenses?
03:25 No, currently, no. Today, we announced the PM5 project, which is an expansionary project.
03:31 Today, the production capacity of MBCO in the production of paper towels is 400,000.
03:36 The PM5 project will be another 400,000, God willing, with a value of 1.5 billion Riyals.
03:43 Today, the local demand in the Saudi market is 1 million tons of paper towels.
03:48 The Saudi market growth is 4.2%, while the global market is 3.8%.
03:54 40% of our needs in paper towels are purchased.
03:59 God willing, with this project, we will meet the local demand and enhance local content and local industry.
04:04 This production line, you cost about 1.5 billion Riyals.
04:08 Yes.
04:09 Is there a chance to have CAPEX or investments in new production lines before the end of the year?
04:17 We announced the PM5 project, and we will announce the details of it, God willing,
04:22 and when it will be implemented, God willing, at the right time.
04:27 How was the financing mechanism for the 1.5 billion Riyals?
04:31 It will be announced. Of course, it will be a mix of debt and equity.
04:35 Details will be announced, God willing, at the right time.
04:37 How much is the loan amount on the company today?
04:39 The amount of loans is about 500 million Riyals today.
04:44 Debt to equity, God willing, compared to the global peers, is on a good level.
04:50 How much is the debt to equity?
04:52 I think it is about 50% now.
04:55 When you look at the high interest rate, we see that the rates are high and will remain high for a while.
05:04 How do you differentiate the company from the current high interest rates?
05:08 To what extent does this affect your results?
05:11 Because we have a rise in the borrowing costs.
05:13 Of course, the rise in interest rates affects all companies that have loans.
05:18 Today, we adopt financial policies for the transfer, and the most important of which is the government's capabilities.
05:24 For us as an industrial company, the government's capabilities, such as the development fund,
05:28 such as the Saudi Ex-Im Bank, the import and export bank,
05:32 which are the capabilities of the industrial sector and the incentives of the industrial sector,
05:37 to the extent of the economic problems that we face.
05:42 You said that the company's loans amount to about 500 million Riyals.
05:47 Did you have any problems with the banks when you were in the process of making the losses?
05:53 Did we have any defaults, a delay in repayments, or a re-scheduling?
05:57 No, thank God. Today, the company's balance sheet is in good shape.
06:00 We do not forget that last year the company achieved a net profit of about 270 million Riyals.
06:07 Thank God, our equity ratio is healthy, and our covenants are in good hands with the banks.
06:13 I hope that all your efforts will be successful.
06:18 Thank you for this interview, Mr. Rakan Abunian, a member of the board of directors of Mabco.
06:23 Thank you.
06:24 Our viewers, with this interview, we have reached the end of what we have discussed about Mabco.
06:33 We will continue to discuss more topics with you.
06:37 Tomorrow, we will return to the studio in Dubai.