Riyadh Cables expects to maintain double-digit profit driven by giga projects

The Riyadh-based firm recorded revenue growth of 40.3 percent to SR6.9 billion in 2022, while its sales volumes increased by 37.1 percent to 190 kilo tons. (Supplied)
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Updated 19 March 2023

Riyadh Cables expects to maintain double-digit profit driven by giga projects

  • Firm recorded impressive net profit of SR351.9 million for 2022, an increase of 46.6 percent over the previous year

RIYADH: In its first-ever public result after being listed on the Saudi Stock Exchange, Riyadh Cables Group Co. announced an impressive net profit of SR351.9 million ($93.84 million) for 2022, registering an increase of 46.6 percent over the previous year. 

The Riyadh-based firm recorded revenue growth of 40.3 percent to SR6.9 billion during the same period, while its sales volumes increased by 37.1 percent to 190 kilo tons.  

The robust performance prompted RCG’s board to propose dividends of SR225 million at SR 1.50 per share for the financial year 2022, in line with its previous guidance and subject to shareholders’ approval at the Annual General Meeting.  

In an exclusive interview with Arab News, the company’s CEO Borjan Sehovac, said: “Strong local and regional demand drove an increase in sales volumes, resulting in a boost to sales growth. Profitability was enhanced by successful SG&A (selling, general and administrative expenses) optimization measures and overall cost management.”  




Riyadh Cables Group Co. CEO Borjan Sehovac. (Supplied)

He went on to add that RCG’s ability to win a larger share of bids locally and regionally was due to its “stellar reputation which we built along the decades.”  

With strong activity expected to be sustained in RCG’s core Middle East markets, he said they anticipate substantial demand-led growth in revenue in 2023, remaining healthy in the range of 3 percent to 5 percent, “while capex of SR200-plus million is expected to support the strong order backlog.”  

The company expects its net profit to increase by a double-digit figure in the financial year 2023. 

Tadawul listing 

Founded in 1984, RCG got listed on Tadawul on Dec. 19, 2022, after successfully raising $378 million from an initial public offering.  

After a long and strong track record, in which the company has achieved a leadership position in its sector, Sehovac said the IPO was a “natural next step on our growth journey – increasing our profile, strengthening our institutionalization drive and positioning us for future expansion.”  

Sehovac calls 2022 a “historic year” for their business, not least for the successful debut of RCG on the Saudi Exchange, but for reporting significant growth in both sales volumes and revenues for the full-year 2022.

“The company’s strong sales, coupled with an unwavering focus on operational excellence and efficiency, have not only resulted in impressive profitability but also ensured sustainable long-term growth,” said the CEO.  

RCG is among the 18 companies or funds that offered parts of their shares through IPOs during last year as the Saudi Stock Exchange continues to drive market growth in the region.  

At the end of 2022, Tadawul had a total of 223 listed companies, with the total offered value reaching SR37.51 billion as 2.96 billion shares/units were offered for all IPOs.  

Sehovac said the Saudi capital market is the region’s largest, most liquid and most attractive market. 
“Backed by the ambitions of Saudi Vision 2030, the underlying evolution of the Kingdom is, and will always be reflected in its financial markets,” he said, adding that they are proud to be active participants in it. 




The Riyadh-based firm recorded revenue growth of 40.3 percent to sR6.9 billion in 2022, while its sales volumes increased by 37.1 percent to 190 kilo tons. (Supplied)

Growth prospects   

RCG, which serves customers in Saudi Arabia, the Gulf Cooperation Council and international markets, is bullish about the growth prospects of the cables industry.  

“All global trends and indicators confirm that the power cables market is expected to grow globally based on the ambitious development plans and major demand drivers, such as energy transition and digital transformation,” said RCG CEO.  

On a local level, he said the power cables market in the Kingdom is expected to grow at a compound annual growth rate of 8.3 percent between 2022 and 2027 to reach SR16.8 to SR18.7 billion, driven by giga/mega projects as well as industrial and housing development.  

“RCG, being the largest player in the region, is ideally positioned to benefit from this growth,” he affirmed. 

Expansion strategy 

The company owns and operates 15 cable and related materials manufacturing and testing facilities, extending over 1.5 million sq. m in Riyadh, Sharjah and Baghdad. Its manufacturing infrastructure is integrated across the value chain including six factories to manufacture raw materials used in the cables industry to support its own nine cables factories. 

“This makes us self-reliant while also improving our manufacturing efficiency by being able to control the cost and quality of our manufacturing materials,” Sehovac said.

Asked about its expansion plan, he replied the company will expand its footprint in due course, and “we’ll make announcements to the market at the appropriate time.” 

RCG has a vast regional distribution network and a production capacity of 264,000 tons per year. 

Sehovac said the company is continuously looking to increase its market share by focusing on increasing sales of its primary products in existing markets and expanding to neighboring markets.  

He clarified that the company doesn’t have any immediate plans to raise funding as “we are a well-funded business with a strong balance sheet and plenty of headroom to grow.”   

With regard to the supply chain — as the raw materials are mostly imported —how does the company ensure smooth supply amid the volatile pricing of metal and aluminum?   Sehovac insists that the company always strives to increase the percentage of local content in its manufacturing process. 

“In fact, RCG sources its needs of aluminum, lead, and polymers locally. The company buys its core manufacturing materials through long-term contracts,” he revealed, adding that they also use a well-engineered hedging mechanism to offset commodity price volatility risk and stability of profits. 

ESG goals 

Divulging about the company’s environmental, social and governance strategy, Sehovac said the company owns state-of-the-art recycling facilities for the reuse of recyclable metals, polymers and cable drums, contributing effectively to the sustainability processes.  

“ESG is at the heart of RCG’s strategy. We are committed to reducing waste and CO2 emissions,” he said, adding that they are amongst key suppliers of renewable energy projects, supporting the Kingdom’s plans for generating 58.7 gigawatts of renewable energy with locally manufactured products. 

The CEO called Vision 2030 as “a roadmap for its investment plans, and to be a key player in delivering the vision’s objectives.” 

“This is a fantastic opportunity for our business and one that we are fully capitalizing on,” he concluded.


Pakistan’s foreign exchange reserves reach $10 billion — central bank

Updated 7 sec ago

Pakistan’s foreign exchange reserves reach $10 billion — central bank

  • Last week, Pakistan’s depleting forex reserves shored up slightly after receiving $500 loan from China
  • Central Bank says Pakistan’s official reserves stood at $4.6 billion on March 17 after external support

ISLAMABAD: Pakistan’s central bank said on Friday the country’s total foreign exchange reserves stood at $10 billion on March 17 after it received $500 million from a Chinese commercial bank.
Cash-strapped Pakistan has been making desperate attempts to secure external financing to stave off a balance-of-payments crisis, with its forex reserves depleting to critically low levels, currency hitting new lows against the dollar, and inflation at a multi-decade high.
The country is trying to secure a $1.2 billion loan tranche from the International Monetary Fund (IMF), as part of its $7 billion bailout program, to keep the economy afloat.
Last week, Pakistan’s depleting forex reserves shored up slightly after the Industrial and Commercial Bank of China (ICBC) released the second instalment of $500 million as part of a $1.3 billion facility to the country.
"The total liquid foreign reserves held by the country stood at US$10,139.2 million as of March 17, 2023," the State Bank of Pakistan (SBP) said in a statement on Friday.
It added the foreign reserves held by the State Bank of Pakistan (SBP) stood at US$4,598.7 million, while the net foreign reserves held by commercial banks in the country amounted to US$5,540.5 million.
"During the week ended on March 17, 2023, SBP received US$500 million as [Government of Pakistan] commercial loan disbursement. After accounting for external debt repayments, SBP reserves increased by US$280 million to US$ 4,598.7 million," the bank said.
It may be recalled that Pakistan’s official forex reserves held by the central bank fell rapidly, from $16.3 billion in February 2022 to a nine-year low of $2.92 billion on February 3, 2023. The dwindling reserves, barely enough to cover three weeks of imports, pushed the country to the brink of default.
To prevent the outflow of dollars, Pakistan imposed restrictions on imports, with the move prompting the partial closure of many industrial units and affecting exports, which provide a major source of revenue for the country.


Scandal-plagued Japan tech giant Toshiba gets tender offer

Updated 24 March 2023

Scandal-plagued Japan tech giant Toshiba gets tender offer

  • Toshiba's deep troubles began with a sprawling accounting scandal in 2015, involving books being doctored for years
  • Its US nuclear arm Westinghouse filed for bankruptcy in 2017, after years of deep losses as safety costs soared

TOKYO: Scandal-embattled Japanese electronics and technology manufacturer Toshiba has accepted a 2 trillion yen ($15 billion) tender offer from Japan Industrial Partners, a buyout fund made up of the nation’s major banks and companies.
If the proposal succeeds, it will be a major step in Toshiba’s yearslong turnaround effort, allowing it to go private and delist from the Tokyo Stock Exchange. But overseas activist investors own a significant part of Toshiba’s shares, and it’s unclear if they will be happy with the latest bid.
Tokyo-based Toshiba Corp. announced its board accepted the bid at 4,620 yen ($36) a share late Thursday. Toshiba closed at 4,213 yen ($32) a share Thursday, and is trading at 4,474 yen ($34) early Friday. The offer was announced after trading closed in Tokyo.
The move comes while the world’s financial sector is in turmoil over the ripple effects from the recent collapse of banks in the US
The critical point is that the latest offer, if successful, will keep Toshiba’s business Japanese in an alliance with Japanese partners.
Japan Industrial Partners, set up in 2002 to restructure Japanese companies, lists big names among where it has invested, such as Sony, Hitachi, Olympus and NEC.
The consortium includes about 20 Japanese companies, such as Orix Corp., a financial services company, electronics manufacturer Rohm Co. and the megabanks such as Sumitomo Mitsui Banking Corp., according to Japanese media reports.
The deep troubles at Toshiba began with a sprawling accounting scandal in 2015, involving books being doctored for years. That added to its woes related to its nuclear energy business.
Its US nuclear arm Westinghouse filed for bankruptcy in 2017, after years of deep losses as safety costs soared. Toshiba is also involved in the decommissioning effort at the Fukushima nuclear plant heavily damaged by an earthquake and tsunami in March 2011.
Toshiba has gone through several presidents over the years, as the brand once prized for making household appliances, laptops, batteries and computer chips, became the target of overseas activist shareholders.
The latest proposal still needs to go through regulatory reviews in several countries, including the US, Vietnam, Germany and Morocco. The process is expected to take several months.
Toshiba has been trying to go private in recent years. Proposals to split Toshiba into three, and then two, companies were rejected by shareholders. Delisting will allow Toshiba to leave behind the activist investors.
Toshiba had its humble beginnings in a telegraph equipment factory in 1875. The brand had been synonymous with the power of modern Japan’s manufacturing sector. It has sold parts of its operations, including its flash-memory business, now known as Kioxia, although Toshiba remains a stakeholder in Kioxia.
Whether Toshiba can get back on a solid growth track remains uncertain. Last month, Toshiba lowered its profit forecast for the fiscal year through March to 130 billion yen ($1 billion), down from an earlier projection for a 190 billion yen ($1.5 billion) profit.
 


US Commerce Department adds 14 Chinese firms to red flag list

Updated 24 March 2023

US Commerce Department adds 14 Chinese firms to red flag list

  • Chinese Embassy accuses US of abusing export control measures and using state power to suppress and contain foreign companies

WASHINGTON: The Biden administration on Thursday added 14 Chinese companies to a red flag list, forcing US exporters to conduct greater due diligence before shipping goods to them because US officials have been unable to inspect the listed entities.
Being added to the list can potentially start a 60-day clock that could trigger much tougher penalties.
“Enforcing our export controls is a crucial part of protecting American national security,” US Deputy Secretary of Commerce Don Graves said in a statement following the announcement. “We are committed to using all of the tools at our disposal to establish how advanced US technology is being used around the globe.”
ECOM International and HK P&W Industry Co. Ltd. were among those added to the list and did not respond to requests for comment.

A spokesperson for the Chinese Embassy in Washington said “China strongly deplores and firmly opposes” moves by the United States to “abuse export control measures” and use “state power to suppress and contain foreign companies.”
“The US side should immediately stop its wrong practices. China will take necessary measures to resolutely safeguard the legitimate rights and interests of Chinese companies,” the spokesperson added.
The United States has used restrictions on exports of US goods as a key tool to thwart Beijing’s technological advances, ratcheting up tensions between the two countries.

 

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Fed comments, US crude stock build hit oil market

Updated 23 March 2023

Fed comments, US crude stock build hit oil market

LONDON: Oil prices dipped on Thursday, having hit their lowest since late 2021 earlier this week, after Federal Reserve Chair Jerome Powell highlighted banking sector credit risks for the world’s largest economy, while US crude stockpiles swelled.

Brent crude futures were down 54 cents, or 0.7 percent, to $76.15 a barrel at 0929 GMT, while US West Texas Intermediate crude dropped 62 cents, or 0.9%, to $70.28.

Powell said on Wednesday that banking industry stress could trigger a credit crunch, with “significant” implications for an economy that US central bank officials projected would slow even more this year than previously thought.

HIGHLIGHTS

Goldman Sachs said on Thursday that demand from China continued to surge across the commodity complex, with oil demand topping 16 million barrels per day.

The bank forecast Brent to reach $97 a barrel in the second quarter of 2024.

US crude oil stockpiles rose unexpectedly last week to their highest in nearly two years, latest data from the Energy Information Administration showed.

Crude inventories rose in the week to March 17 by 1.1 million barrels to 481.2 million barrels, the highest since May 2021. Analysts in a Reuters poll had expected a 1.6-million-barrel drop.

The dollar slid to a seven-week low against a basket of other currencies, providing a price floor for oil as a weaker greenback makes oil cheaper for holders of other currencies.

Also supportive, Goldman Sachs said on Thursday that demand from China, the world’s biggest oil importer, continued to surge across the commodity complex, with oil demand topping 16 million barrels per day.

The bank forecast Brent to reach $97 a barrel in the second quarter of 2024.

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Brent plunge fails to displace Russian crude for Asian buyers

Updated 23 March 2023

Brent plunge fails to displace Russian crude for Asian buyers

  • Middle East crude prices in Asia appear to be resilient as the market bets on robust demand from China
  • With Russian crude so cheap, a move of a few dollars on Brent-Dubai EFS or even freight would not make a difference

SINGAPORE/LONDON: A plunge in Brent crude prices has narrowed the spread between Atlantic Basin and Middle East benchmarks but has failed to spur interest from Asian refiners, which are instead buying up discounted Russian oil, leaving an overhang in African supply.
Global oil benchmark Brent tumbled more than 10 percent over the past two weeks, touching a 15-month-low of $70.12 a barrel on Monday, as investors have fretted over banking sector turmoil in the US and Europe and as strikes in France have dented oil demand.
Middle East crude prices in Asia appear to be resilient as the market bets on robust demand from China, which is rebounding from zero-COVID restrictions that formerly squeezed its economy.
The Brent-Dubai Exchange for Swaps (EFS), representing the premium of light sweet Brent over Middle East sour crude Dubai, shrank to $1.40 a barrel this week, its narrowest in more than two years.
A tighter EFS typically means Brent-linked crude produced in the Atlantic Basin, including from West African countries, becomes more economical for Asian buyers.

But traders have not seen a significant uptick in Asian demand for West African crude, because the cargoes remain much more expensive than Russian oil, even though they have gained competitiveness over Middle Eastern crude.
With Russian crude so cheap, a move of a few dollars on Brent-Dubai EFS or even freight would not make a difference, other than providing Chinese buyers with a tool to drive prices lower, said a West African crude trader.
Russia’s light sweet ESPO crude for May delivery is traded at a discount of about $6.80 a barrel against the ICE Brent on the deliver-ex-ship (DES) basis to northern China, trading sources said. Meanwhile, Congo’s Djeno, a medium sweet crude favored by Chinese refiners, is assessed at a premium of $1.50 a barrel above ICE Brent for May delivery on DES basis.
The pattern is similar in India, where Russian crude is delivered at discounts to Dubai quotes while West African oil is loaded at parity or a slight discount to dated Brent, an Indian trader said.
Russia became the top crude supplier to China and India in recent months, eroding the market share of other suppliers such as West African countries.
Just over 30 million barrels of West African crude have been loaded for Asia in March, the smallest volume since 2014 or earlier, shipping data from Refinitiv and Kpler showed.
The slowing exports of West African crude are exacerbating a supply overhang in the West of Suez market and weighing down the Brent prices that the West African grades are pegged to.
On Tuesday, about 20 million barrels of Nigerian crude for April loading were still unsold, just as the trade cycle for May cargoes was about to kick off. About four April-loading Angolan crude cargoes were also awaiting buyers.
In the past three months, Nigeria has exported around 42 million barrels of crude on average each month while Angola’s average monthly exports have been around 33 million barrels.