Tasnee announces the fourth quarter 2015 financial results
1/24/2016

 

 

 

 

 

The National Industrialization Company (Tasnee), announced its quarterly consolidated financial results for the fourth quarter ending December 31, 2015, during a press conference held in January 24, 2016 by Mutlaq Al-Morished, Tasnee CEO and a number of Tasnee executives.
 
Tasnee increased its petrochemicals production capacity as a result of its ongoing efforts to increase production and reduce cost which comes in line with the ongoing overall restructuring process that had been implemented since September, 2015.
 
The company had also initiated many performance improvement programs and initiatives which are expected to be finalized along with the restructuring process by the end of the first half of 2016; both will help Tasnee in achieving its objectives, improving performance and increasing productivity while reducing production cost, which consequently will sustain a positive impact on Tasnee’s future financial results.
 
Fourth Quarter Highlights:
· Net loss of 690.2 million Riyals during the fourth quarter of 2015 compared to a net profit of 160.7 million riyals for the same period of 2014
· Gross profit of 160 million Riyals, compared to a gross profit of 751 million Riyals for the same period in 2014
 
2015 Financial Results:
· Net loss of 1,426.8 million Riyals, compared to a net profit of 1,070.5 million Riyals for 2014
· Revenue of 15.1 billion Riyals, compared to 18.7 billion Riyals for 2014 due to low average selling prices of all products
· Gross Profit of 2,010 million Riyals, compared to  4,612 million Riyals for the year 2014
Al-Morished attributed these results to the continuous slowdown in the global economy and Asia in particular during that period. This led to drop petrochemical products demand globally, especially the titanium dioxide products, causing a decline in profit margins.
In addition, the selling prices decline encouraged all manufacturing companies to hold their market shares hoping for the situation to improve, allowing surplus of supply and thus pressure the selling prices to decline more. In addition to the above, the below circumstances also contributed in this loss:
 
· Impairment of non-current assets value for one of Tasnee’s subsidiaries of 330 million Riyals during the fourth quarter, as a result of plants performance reevaluation.
· High cost of sales due to the increased sales volumes in petrochemicals and the high inventory cost revaluation and the decline in selling prices for the Titanium Dioxide and Acrylic Acid
· General and administrative expenses also increased as a result of the ongoing company restructuring and performance improvement programs along with compensations for laid off employees
· In addition to other expenses as a result of fair value of hedging and derivatives contracts by one of Tasnee subsidiaries with local banks to reduce the risk of fluctuations in foreign currency exchange rates in the first quarter of 2015, however, these costs are not recurring and will positively contribute to the company's future results.
 
Al-Morished also briefed the attendees on the Tasnee’s new projects as the trial operations for the butanol project has started, where the commercial operation startup is expected to be during the first half of 2016, after equipment and production efficiency testing through technical licensing and contracts. The butanol project is owned equally by the Saudi Kayan Petrochemical Company, Sadara Chemical Company and the Saudi Acrylic Acid Ccompany (Tasnee owns 52.3%).
As for the Titanium Business Unit, there were some technical difficulties presented during the smelter project trial startup, it is expected that the project startup will be during the second half of 2015. The smelter will provide additional feedstock capacity to the titanium dioxide industry. Additionally the sponge project is expected to startup by the second half of 2017.
 
In addition, Tasnee’s project in the Hail, KSA reflects the company's strategy of economy diversification and sustainable growth move; the project aims at increase Tasnee’s downstream manufacturing capacity and provides more job opportunities for Saudis.