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.


Respite for oil market amid rate hike worries

Updated 01 June 2023

Respite for oil market amid rate hike worries

  • Oil markets may have been oversold in the last two trading days, says analyst

RIYADH: Oil steadied on Thursday as a potential pause in US interest rate hikes and the passing of a crucial vote on the US debt ceiling bill were offset by a report of rising inventories in the world’s biggest oil consumer.

US Federal Reserve officials on Wednesday suggested interest rates could be kept on hold this month and the US House of Representatives passed a bill suspending the government’s debt ceiling, improving the chance of averting a disastrous default.

Brent crude futures fell 10 cents, or 0.14 percent, to $72.50 a barrel by 1339 GMT while US West Texas Intermediate crude rose 7 cents, or 0.1 percent, to $68.16. Both benchmarks fell on Tuesday and Wednesday.

“Oil markets may have been oversold in the last two trading days,” said CMC Markets analyst Tina Teng. “Sentiment rebounded amid the debt bill’s passage in the House and (the) Fed’s rate hike pause signal.”

HIGHLIGHTS

Market sources citing American Petroleum Institute figures on Wednesday said that US crude inventories rose by about 5.2 million barrels last week.

• Brent crude futures fell 10 cents, or 0.14 percent, to $72.50 a barrel by 1339 GMT while US West Texas Intermediate crude rose 7 cents, or 0.1 percent, to $68.16.

Mixed demand indications from China, the world’s biggest oil importer, have nonetheless weighed on the market, as has industry data showing a rise in US crude inventories.

Market sources citing American Petroleum Institute figures on Wednesday said that US crude inventories rose by about 5.2 million barrels last week.

“The current mood is one of pessimism,” said Tamas Varga of oil broker PVM. “Investors have been pragmatic and risk averse of late.”

Also in focus is the June 4 meeting of the OPEC+ producer group, in which the Organization of the Petroleum Exporting Countries and allies including Russia will discuss whether or not to cut oil production further.

Barclays forecast

British multinational bank Barclays has slashed the average price of its Brent crude forecast for this year from $92 to $87 a barrel. The bank also slashed its price forecast of Brent for 2024 as it cut the average projected price to $87 a barrel from $97. 

Chinese company in Brazil 

China’s CNOOC Ltd. has begun production at the Buzios5 well off the coast of Brazil, the company said in a statement on Thursday. 

The well is the fifth phase of the Buzios oil field off Brazil’s southeast coast. At an average water depth of 1,900 meters to 2,200 meters, the field is the world’s largest deep-water pre-salt oil field, with daily production of 600,000 barrels, the company said. 

CNOOC’s Brazilian subsidiary owns 7.34 percent of the Buzios shared reservoir, which is 88.99 percent owned by Brazilian state-owned oil and gas company Petrobras.  CNOOC paid $1.9 billion to Petrobras last year to secure a 5 percent stake in a production sharing agreement at the field. 


UAE’s in-country value projects driving billions to local firms

Updated 02 June 2023

UAE’s in-country value projects driving billions to local firms

ABU DHABI: More than $27.23 billion has been redirected to the local economy since the UAE Ministry of Industry and Advanced Technology (MoIAT) and ADNOC launched major in-country value programs to support domestic industries.

Speaking at the Make in the Emirates Forum, Abdulla Al-Shamsi, Assistant Undersecretary of MoIAT, said more than $14.43 billion of investment was redirected to the local economy last year alone, an increase of 25 percent year-on-year.

“The National In-Country Value Program is a nationwide program that speaks one language across many different sectors,” Al-Shamsi said. “It’s one methodology and this is something we’re very proud of because it benefits the private sector and when the private sector sees this it helps them prepare, invest, and spend.”

The forum heard how the National ICV Program is “functionating well and accelerating.”

The forum also heard how industrial zones are playing a critical role in the in the country’s sustainable industrial development and broader economic prospects. Local industrial leaders described how they are utilizing alternative energy resources such as solar and hydrogen to reduce their carbon footprint.

The second edition of the Make it in the Emirates Forum concluded on Thursday with the UAE showcasing its unique value proposition to international investors.

Investors were invited to explore opportunities and competitive advantages, with panel discussions focusing on the National In-Country Value (ICV) Program, the role of industrial zones, competitive financing as a key enabler and local talent in the private sector.

The UAE’s industrial exports reached $47.6 billion in 2022, growing 49 on 2021. The industrial sector's contribution to GDP rose to $49.5 billion in 2022, a 38 percent increase on 2020.

The Make it in the Emirates Forum is organized by the Ministry of Industry and Advanced Technology in partnership the Abu Dhabi Department of Economic Development (ADDED) and ADNOC.

On the first day of the forum, the UAE government announced $2.7 billion in industrial offtake agreements, building on the $29.9 billion of offtake agreements announced at the 2022 edition of the forum.

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Pakistan posts record inflation for second consecutive month

Updated 01 June 2023

Pakistan posts record inflation for second consecutive month

  • Inflation of 37.97% in May set national record, adding to problems of balance of payment and risk of sovereign default
  • In April, the bureau said Pakistan's CPI at 36.5% was the highest recorded as well as the highest in South Asia

ISLAMABAD: Pakistan's annual inflation rate rose to 37.97% in May, the statistics bureau said on Thursday, setting a national record for the second month in a row, adding to its problems of a balance of payment crisis and the risk of a sovereign default.

Already in April, the bureau said Pakistan's CPI at 36.5% was the highest recorded, as well as the highest in South Asia, ahead of Sri Lanka, which posted annual inflation of 25.2% in May.

Pakistan's month-on-month rise in May was 1.58%, the bureau said in a statement, adding vegetables, pulses, wheat, wheat flour, rice, eggs and chicken in food items and fuel and gas prices caused the increase.

Inflation has been on an upward trend since early this year after the government took painful measures as part of fiscal adjustments demanded by the International Monetary Fund (IMF) to unlock stalled funding.

The IMF demands include the withdrawal of subsidies, a hike in energy prices, a market-based exchange rate and new taxation to generate extra revenue in a supplementary budget.

Islamabad says it has met the demands, but the IMF has yet to release the $1.1 billion funding stalled since November as part of the $6.5 billion Extended Fund Facility agreed in 2019.

The funding is critical for Pakistan to unlock other bilateral and multilateral financing.


Pakistan’s national currency makes historic recovery against USD in open market — currency dealers

Updated 01 June 2023

Pakistan’s national currency makes historic recovery against USD in open market — currency dealers

  • Appreciation follows central bank’s decision to allow banks to buy dollars from interbank market for credit and debit card payment settlements
  • Rupee was trading at Rs290 in open market during afternoon trading session as compared to Rs315 in the previous day’s trading

KARACHI: Pakistan’s national currency posted historic gains against the United State dollar in the open market on Thursday, following the central bank’s decision to allow banks to buy dollars from the interbank market for credit and debit card payment settlements, currency dealers said.

The rupee was trading at Rs290 in the open market during the afternoon trading session as compared to Rs315 in the previous day’s trading, showing an appreciation of 8 percent, according to dealers. 

“The rupee has appreciated more than Rs25 in the open market and this has happened for the first time in the history of Pakistan,” Malik Bostan, chairman of the Exchange Companies Association of Pakistan (ECAP), told Arab News. 

The currency appreciated in the open market after the central bank on Wednesday allowed authorized dealers, that is banks, to “purchase dollar from the interbank for settlement of the card based cross border transactions with IPS (Instant Payment System),” a notification said.

Prior to the State Bank notification, commercial banks were buying around $15-20 million from the free market per day, putting an excessive burden on it, the key reason for the widening gap between the interbank and open market, according to Bostan. 

“The banks were buying dollars from the open market at Rs315 but they were selling to their customers for the settlement at Rs325,” Bostan said, adding that banks had been buying from the open market but selling to their credit card holders at higher rates which excessively burdened the free market.

“They, Finance Minister Ishaq Dar and Central bank, took the timely decision and allowed them to purchase from the interbank market instead of the exchange companies,” he added.

Bostan’s claims could not be independently verified.

The ECAP chief predicted that the central bank’s decision would lead to further appreciation of the rupee in the open market, to reach close to the interbank rate.

The rupee in the interbank was trading between Rs290 and Rs300 at the end of trading session on Thursday, according to Bostan.

Pakistani analysts said the central bank’s move had eased the pressure on the open market and would also narrow the gap between the open and interbank markets in line with the International Monetary Fund’s conditions.

“The demand for credit and debit card settlement is around $2 billion to $2.5 billion per annum and the central bank’s decision has eased off the pressure from the open market,” Tahir Abbas, Head of the research at Arif Habib Limited, said. “The IMF also wanted to reduce the gap between the exchange rates prevailing in the interbank and open markets.” 

The rupee in the interbank market closed at Rs285.47 against the greenback on Wednesday.


Amid decades-high inflation, Pakistan slashes petrol price by Rs8 per liter

Updated 31 May 2023

Amid decades-high inflation, Pakistan slashes petrol price by Rs8 per liter

  • After revision in prices, petrol will now be sold for Rs262 per liter, says finance minister
  • Pakistan slashes prices of high speed diesel, light diesel oil by Rs5 per liter respectively

ISLAMABAD: Pakistan’s Finance Minister Ishaq Dar announced the government’s decision to slash the price of petrol by Rs8 per liter on Wednesday, as Pakistan attempts to provide relief to the masses amid decades-high inflation. 

Inflation increased to a historic high of 36.4 percent in Pakistan in April 2023, the highest since 1964, after the South Asian country hiked fuel and energy prices to revive a $6.5 billion loan program with the International Monetary Fund (IMF). 

To reduce the burden of inflation from the masses, Pakistan slashed the price of petrol by Rs 12 per liter two weeks ago. The South Asian country revises prices of petroleum products fortnightly. 

In a brief video message on Wednesday, the finance minister said that prices of petroleum products had not reduced drastically over the past 15 days nor had the value of the rupee significantly improved against the US dollar. 

“The maximum that we could reduce the petrol price [a fortnight ago] was Rs12 per liter,” Dar said. “Today, by reducing an additional Rs8 per liter, the price of petrol will reduce by Rs20 per liter in total. So, its price will reduce from Rs270 per liter to Rs262 from June 1,” he added. 

Dar also announced a reduction in the price of high speed diesel by Rs5 per liter and light diesel oil by Rs5 per liter. The price of kerosene oil will remain unchanged, he added.  

The finance minister said after the latest price reduction, high speed diesel, kerosene, and light diesel oil would cost Rs253, Rs164.07, and Rs147.68 per liter respectively.

Pakistan also slashed its oil imports by almost half last month, reducing it by 48 percent to 1.07 million tons during April 2023 as compared to 2.05 million tons during April 2022, a research report by Pakistan’s largest securities brokerage company, Arif Habib Limited, said.