الرئيس التنفيذي لشركة الشرق الأوسط لصناعة وإنتاج الورق "مبكو" السعودية لـ CNBC عربية: الشركة تصدّر 40% من إنتاجها خارج السعودية
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00:00 And I return to Mr. Samir Safran, the CEO of Asharq Al-Awsat, a company that produces
00:05 paper.
00:06 I welcome you again.
00:07 The presentation was clear in detail about the reasons you want to increase capital
00:13 and expand, etc.
00:14 Let me start with this direction.
00:15 I have studied this step in advance.
00:16 To what extent do you think that the timing today is appropriate for you to increase capital
00:24 and also enter the general investment fund in this area?
00:30 I welcome you again.
00:32 The production of paper and packaging, as I mentioned in your report, in the Arab region
00:40 or the Gulf region, is clearly showing a growth of 4% compared to global growth, due to
00:48 the economic situation in the region, as well as the increase in population in the Middle
00:54 East region, and also the presence of technological developments such as e-commerce.
01:00 Paper industries in general are long-term industries, not short-term.
01:05 One project takes about two to three years to be implemented.
01:10 We see that with the rapid growth in the Saudi Arabian Kingdom, despite the fact that the
01:16 local resources meet the needs of the markets, there is a lot of room, especially if we consider
01:22 that the Kingdom still imports about 30 to 40% of its paper needs from abroad, and at the
01:28 same time, we as local factories, or BIPCO, export about 40% of our production outside the
01:34 Saudi Arabian Kingdom.
01:35 We are distinguished in this by the control over the third party, the excellent geographical
01:40 location, and the long experience in the field of digitalization.
01:44 We believe that the expansion decision will come at a very good time, with what the Kingdom
01:50 is witnessing from the economic development.
01:53 Okay, Mr. Sami, let me now move to your expectations for the coming period, with this expansion
01:59 direction and your confidence that the market will be in demand for your products and sales.
02:05 We have a global challenge, and not just in Saudi Arabia, which is the prices of raw
02:10 materials, which raise the cost of operation or production inputs.
02:15 How can you overcome this challenge?
02:18 The question is excellent.
02:20 First, as we mentioned before, in terms of the needs, the demand in the Saudi Arabian
02:26 Kingdom markets, especially healthy, confirms that the operating rates of the factory here
02:32 exceed 90%, while the global rates have almost dropped to 90%.
02:37 And it is almost from our experience in the markets, considering this the lowest demand
02:43 period that the market region has gone through.
02:46 However, we have maintained a high level of sales, and this is reflected in reality when
02:51 the people in the report mentioned the production cost.
02:54 In reality, the production cost was caught in the tonnage, but it rose overall due to
02:59 the increase in sales from this period to the current period.
03:03 Our confidence will continue if we maintain our distinction in maintaining the production
03:09 cost, and this is in reality if we do a benchmarking between MIPCO and international standards
03:15 that we find, we achieve advantages in different areas.
03:19 For example, although water is considered a challenge in the Saudi Arabian Kingdom, but
03:25 this did not prevent us from maintaining the production cost within the control of the
03:31 Saudi Arabian Kingdom, because of the rolling technologies that we use, not using sensitive
03:37 natural resources.
03:38 In this way, we have maintained the environment and reduced the production cost.
03:44 So, Mr. Sami, you mean the ESG standards that you are committed to?
03:48 That's right.
03:49 In reality, the company's economy in general is a circular economy, first of all, paper
03:55 waste, the transformation of the sewage into half a million tons, which keeps carbon emissions
04:01 low, water is a regulated water, and this helps, of course, if you go back to the annual
04:07 report that was issued on ESG, you will find that MIPCO has reached high levels compared
04:12 to its peers in the region.
04:14 Does this mean that I will give you the priority tomorrow to look for funding sources, mainly
04:19 green trusts?
04:20 That's right.
04:25 If you look at the BM5 project, you will find that we are talking about an investment of
04:31 almost 1.7 billion.
04:32 On the other hand, the use and the collection of the book, we are allocating only less than
04:37 200 million.
04:38 The rest will be funds or funds primarily aimed at the green bonds.
04:45 Excellent.
04:47 Let me see how you will deal with the profits.
04:50 I mean, God willing, if you overcome the challenge of raising costs, I read the topic
04:54 of loss in a different way, and usually, frankly, I look at it more like a notebook.
05:00 I look at the wills and the sales and the near future and how I can benefit from the
05:05 profits and re-employ them at the top of the money again.
05:08 And this raises questions.
05:10 Unfortunately, the region has the mentality of individuals, of subsidized companies, who
05:14 think about distribution, while in the mature markets, they say, no, why should I take
05:18 distribution?
05:19 Let the profits go to the main spending more.
05:22 I have a better view of investment in this company.
05:26 The future of distribution, allow me, and your employment for profits, how can it be?
05:31 True.
05:32 I missed one part of your question last time, which is the issue of loss.
05:38 And indeed, it is something we cannot ignore.
05:41 And that is why part of the strategy that we have proposed is the vertical integration
05:46 to reduce the price fluctuation, because we want to produce raw materials, and therefore
05:50 we are affected by the rise and fall of raw materials, which affects the company's economy.
05:55 Therefore, part of the company's strategy is to enter integration, which in this way
06:00 reduces the price fluctuation and diversification through our investment in the pools.
06:04 And the pool project helped when we worked in the second half of the year in controlling
06:08 the price fluctuation and loss.
06:11 We come to the issue of expansion, there is no doubt.
06:14 Today, Mbku is a long-term investment company.
06:17 As you can see, the policy that we announced, I think, with us for two to three years, there
06:22 is a real seriousness in investment, and that is why it was in the publication of the
06:26 publication, linked to the book sales, it is in investment directly.
06:31 And during the past years, when the company achieves positive results, we always make
06:36 sure that the profits are distributed to the current investors.
06:40 We have, in total, over the past ten years, or before we started, distributed almost
06:46 in eight years, only two years in which we distributed profits.
06:50 Therefore, we always believe that the policy of distribution of profits is very important,
06:54 that you are the shareholder, and he is with you, and you are the one who has the two
06:58 targets.
06:59 You mentioned a very important issue, the redistribution of assets, or reallocated in
07:03 the portfolio.
07:06 How will you look at 2024, according to risks, your investments, and others?
07:10 If you want to explain a little bit about it.
07:13 Look, we, despite the economic indicators, I think it is negative for 2024 in general,
07:20 but our experience in paper industry shows that we have passed 18 months of price
07:26 review, we have become almost two quarters of prices, we have flat.
07:30 We have a very high demand for assets, and we have a very high demand for assets.
07:36 We have a very high demand for assets, and we have a very high demand for assets.
07:42 We have a very high demand for assets.
07:45 We have a very high demand for assets.
07:48 We have a very high demand for assets.
07:51 We have a very high demand for assets.
07:54 We have a very high demand for assets.
07:57 We have a very high demand for assets.
08:00 We have a very high demand for assets.
08:03 We have a very high demand for assets.
08:06 We have a very high demand for assets.
08:09 We have a very high demand for assets.
08:12 We have a very high demand for assets.
08:15 We have a very high demand for assets.
08:18 We have a very high demand for assets.
08:21 We have a very high demand for assets.
08:24 We have a very high demand for assets.
08:27 We have a very high demand for assets.
08:30 We have a very high demand for assets.
08:33 We have a very high demand for assets.
08:36 We have a very high demand for assets.
08:39 We have a very high demand for assets.
08:42 We have a very high demand for assets.
08:45 We have a very high demand for assets.
08:48 We have a very high demand for assets.
08:51 We have a very high demand for assets.
08:54 We have a very high demand for assets.
08:57 We have a very high demand for assets.
09:00 We have a very high demand for assets.
09:03 We have a very high demand for assets.
09:06 We have a very high demand for assets.
09:09 We have a very high demand for assets.
09:12 We have a very high demand for assets.
09:15 We have a very high demand for assets.
09:18 I wish you all the best and thank you for this interview.
09:21 You are welcome.
09:22 Your statement, Mr. Sami Safran,
09:24 you are the CEO of the Middle East Industry and Paper Production Corporation.