Sipchem International Petrochemical Company (Sipchem) announces the annual Financial Results for the Period Ending 31-12-2016
Wednesday, March 15, 2017
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ELEMENT

CURRENT YEAR

PREVIOUS YEAR

% CHANGE

Net profit (loss)

70

288.2

-75.71

Earning or loss per share, Riyals

0.19

0.79

-

Gross profit (loss)

690.3

833

-17.13

Operational profit (loss)

416.6

573.4

-27.35

All figures are in (Millions) Saudi Arabia, Riyals

 

 

ELEMENT

EXPLAINATION

Reasons of annual financial results

The decrease is due to the following factors:

1. Net Sales declined 4.2% compared to the previous year ended 31 December 2015. The major reason for the decline in sales is due to decrease in sales prices of all company products (5% to 22%). Gross Profit declined by 17.3% due to lower sales prices and higher production costs associated with the increase in Gas feedstock, Fuel and energy prices. The impact of the lower Gross Profit was slightly offset by the success of 2016 initiatives that focused on manpower reduction, lower distribution costs, and amended marketing agreements.

2. G&A expenses increased 12.3% in current year ended 31, December 2016 due to non-recurring compensation costs for early retirement initiatives, and costs associated with the operation of the new research and development center in Dhahran Techno Valley and current cost for IFRS implementation.

3. Increase in Investment income of 281.8% is due to increased bridge loans in 1H 2016 to support the maturing Sukuk and increase in deposit rates offered by banks on short-term deposits, and also due to improved treasury management initiatives to take advantage of the higher deposit rates. Increase in financing costs of 41.2% is due to increased 1H 2016 loans to support the maturing Sukuk and also due to SIBOR rate increases.

4. Other Expenses are lower primarily due to lower FX charges in current year and offset somewhat by the write off of replaced equipment in the methanol plant during the current year as announced in Q1 2016 results.

Other notes

1. The Gross Sales reaches 3.37 billion Riyals during the current period ended 31, December 2016 compared to 3.51 billion Riyals for the same period of the previous year, with decrease of 4.2%

2. The Total Shareholders equity (excluding minority interests) reaches 5.84 billion Riyals, during the current period ended 31, December 2016 compared to 5.81 billion Riyals for the same period of the previous year, with an increase of 0.5%.

3. Since the commercial operation of International Polymers Company plant and Gulf Advanced Cable Insulation Company plant which started during 2nd quarter of last year, the first quarter of the same period last year did not include the expenses and financial results of these plant started during 2nd quarter of last year, the first quarter of the same period last year did not include the expenses and financial results of these plants.

4. Tools Manufacturing Facility and industrial parts owned by the Saudi Specialized Products Company in Al Riyadh, commenced their commercial operations in November 2016.