(FIPCO) announces the Consolidated Interim Financial results for the period ended Sep. 30, 2020 (Nine Months)

ELEMENT LIST CURRENT QUARTER SIMILAR QUARTER FOR PREVIOUS YEAR %CHANGE PREVIOUS QUARTER % CHANGE
Sales/Revenue 41.5 46.2 -10.173 45.2 -8.185
Gross Profit (Loss) 5.5 6.5 -15.384 5.1 7.843
Operational Profit (Loss) -1.3 2.2 -1.7 -23.529
Net Profit (Loss) after Zakat and Tax -2.9 -2.7 7.407 -3.4 -14.705
Total Comprehensive Income -2.9 -2.7 7.407 -3.4 -14.705
All figures are in (Millions) Saudi Arabia, Riyals
ELEMENT LIST CURRENT PERIOD SIMILAR PERIOD FOR PREVIOUS YEAR %CHANGE
Sales/Revenue 135 121.1 11.478
Gross Profit (Loss) 20.7 18.3 13.114
Operational Profit (Loss) 2.8 -7.6
Net Profit (Loss) after Zakat and Tax -2.1 -9.3 -77.419
Total Comprehensive Income -2.1 -9.3 -77.419
Total Share Holders Equity (after Deducting Minority Equity) 137 155.5 -11.897
Profit (Loss) per Share -0.18 -0.81
All figures are in (Millions) Saudi Arabia, Riyals
ELEMENT LIST EXPLANATION
Increase (Decrease) in Net Profit for Current Quarter Compared to the Same Quarter of the Previous Year is Attributed to The Consolidated loss Attributable to FIPCO Shareholders for this quarter is higher compared to the corresponding quarter of the last year, mainly due to declined gross profit resulted from decrease in export sales as a result of COVID 19 effects on some countries to which we export, in addition that production processes were relatively affected in some products as a result of the precautionary measures related to travel and movement restrictions, which led to the delay in the arrival of some labors and technicians. 

 

These results achieved in spite of:

 

1- The sales of the subsidiary (FPC) is higher of 172% during this quarter based on improved levels of production and quality resulting from gradual increase in production capacity and higher demand of its products.

2- The general and administrative expenses are lower because of adequate provisions as a result of improved quality levels in FPC, and a decrease in salaries due to the merger of departments following the acquisition on FPC entirely.

3- Decrease in banking charges as a result of the governmental initiatives (represented by SAMA) in order to minimize the impact of the coronavirus outbreak (Covid-19), particularly the initiative of deferred payment program related to postpone the due payment with no interest.

4-Zakat expenses also decreased as a result of FIPCO acquisition of minority stakes in FPC announced on Tadawul website on March 2, 2020.

Increase (Decrease) in Net Profit for Current Quarter Compared to the Previous Quarter is Attributed to The Consolidated loss Attributable to FIPCO Shareholders for this quarter is lower compared to the second quarter of this year, mainly due to: 

 

1- Increase in gross profit because of improved product mix in FPC, in addition to lower cost of goods sold, as a result of concluding contractual relationships with key suppliers of raw materials, which reflected positively on purchase prices and quality levels.

2- Decrease in other expenses resulted from improved production levels in FPC, which led to minimize the unutilized capacity.

3- Decrease in banking charges as a result of the governmental initiatives (represented by SAMA) in order to minimize the impact of the coronavirus outbreak (Covid-19), particularly the initiative of deferred payment program related to postpone the due payment with no interest.

However the sales was lower because of variation in the product mix for the mother company as well as increased expenses of G&A and Zakat.

Increase (Decrease) in Net Profit for Current Period Compared to the Similar Period of the Previous Year is Attributed to The Consolidated loss Attributable to FIPCO Shareholders for this period is lower compared to the corresponding period of last year, mainly due to: 

 

1- Increase in gross profit as a result of increased sales of FPC, based on higher demand of its products, as the commercial operation has commenced starting from Q2 of 2019.

2- The G&A is lower because of FPC expenses for the first quarter of 2019 were classified under the G&A in accordance with IFRS, as the commercial operation has gradually commenced in the 2nd quarter of 2019.

3- Reversing of the credit losses provision due to the absence of its purpose for the current period as main due amounts were collected and the credit relationships was redesigned with some clients.

4- Zakat expenses is also decreased as a result of FIPCO acquisition of minority stakes in FPC announced on Tadawul website on March 2, 2020.

 

These results achieved in spite of:

 

1- Decrease in other income resulted from reversing of the provision for impairment of capital assets sold for low economic viability, during the nine months of 2019.

2- Increase in banking charges arising from loan interest non-capitalization after launching the commercial operation in the 2nd quarter of 2019, however there were some governmental initiatives (represented by SAMA) to minimize the impact of the coronavirus outbreak (Covid-19), particularly the initiative of deferred payment program related to postpone the due payment with no interest.

Basis of the External Auditor’s Opinion Unmodified opinion
Reclassification of Comparison Items Certain Comparative figures have been reclassified to be consistent with the presentation of the current period presentation.
Additional Information – It is worth to mention that the balance of the projects in progress has increased by SR 11.7 million, resulted from buying new and high-tech. machines for FIPCO (currently still under Installation) for the purpose of raising the production capacity in cement bags from 54 million bags to 108 million bags annually, in addition to extruding machines and looms aiming to raise production capacity, improve quality, and enhance production efficiency. 

 

– It is noteworthy that the losses of FPC continued to decline gradually and steadily as a result of the improvement in operations and quality arising from the gradual increase in production capacity and the higher demand for FPC products during successive periods, which led to a positive impact to decline The Consolidated loss Attributable to FIPCO Shareholders after the acquisition.

 

– FIPCO is carefully monitoring the developments related to Covid-19 pandemic and also implemented all precautionary measures to safeguard the safety and well-being of its employees, customers and community to continue running a business as usual basis, in the context of the ongoing pandemic.

The pandemic impact has extended to include the operations delays for some time as a result of taking the precautionary measures directed by the governmental authorities, which were mainly represented in the isolation of influential labors suspected of being infected and the application of legal procedures related to travel and movement restrictions.

 

COVID 19 is also affected the selling prices of some products, and reflected on supply chain and exports in light of taken precautionary measures.

 

As the extent and duration of these impacts are still not certain and depend on future developments that cannot be accurately predicted at the present time, FIPCO will continue to monitor the situation in the Kingdom and all surrounding geographical areas with the purpose of reviewing and dividing the potential risks

 

FIPCO also monitors all governmental support initiatives provided by the government of the Custodian of the Two Holy Mosques to mitigate the effects of Corona virus implications, and studying its benefits to support the sustainable activities and business continuity.