JEDDAH — The Middle East Paper Co. (MEPCO), the region’s leading vertically-integrated paper manufacturer, has announced its financial results for the year ended Dec. 31 2017. Sales revenue increased by 21.5% compared to 2016, due to increases in both sales volume and average sales price. Profitability levels improved significantly compared to 2016 IFRS-adjusted figures. Gross profit of SR186.1 million (at a 24.1% margin) increased by 41.8%, operating profit reached SAR 95.8 million representing a 182.8% increase and the EBITDA margin stood at a comfortable level of 24.2%.

Commenting on the full year results, Eng. Sami Al Safran, CEO of MEPCO, said: “In 2017, MEPCO made a number of important structural adjustments, from systems updates to overall compliance. We are already seeing the fruits of investment in revamping production lines as well as refinement of operating processes. These efforts have led to overall improvements to efficiency and will support future sustainable growth.

“The strong financial results of 2017 are demonstrative of the efforts that MEPCO has made to bring the business to a new level in this globally competitive industry. MEPCO’s commercial and CSR activities are fully aligned with Saudi Arabia’s Vision 2030 program. We are proud to be a successful, award winning company, as evidenced by winning the King Khalid Award for responsible competitiveness in 2017 and CFI’s Best Corporate Governance Award in Saudi Arabia in early 2018.”

Dr. Mohamed Saleh Darweesh, CFO at MEPCO, commented: “We are pleased to announce MEPCO’s financial results in its first full year of reporting in accordance with IFRS. Share of sales for niche products increased during 2017, to represent a greater share than in previous years. The increase in profitability is attributed to the improvement in average sales volume and selling prices compared with 2016, which rose by 5.8% and 11.7% respectively. It should also be noted that 2016 EBITDA and net income figures were positively impacted by an SAR 92 million net gain on claims for expropriated land and premises, and this should be considered when comparing annual figures.

“We made significant headway in improving efficiencies, with cost of sales increasing by 16.3% compared to an increase in sales revenue of 21.5% year-on-year. Selling, general and administrative expenses were SR91.3 million, decreasing by 7.5% from the previous year. Total debt has decreased to reach SR706.0 million, delivering a comfortable debt to equity ratio of 0.98% compared to 1.07% in 2016. The Board of Directors’ recommendation of a dividend of SR 0.75 per share leaves MEPCO in a financial position that has significant capacity to fuel future growth.”

Percentage changes in this announcement are calculated per IFRS-adjusted results for full year 2016. — SG