TASNEE Reports SAR103M of Net Profits in the 1st Quarter 2017

Tasnee announced its first quarter consolidated financial results for the period ending March 31, 2017, at a press conference hosted by Tasnee’s Chief Financial Officer, Mr. Fawaz Al- Fawaz. The conference was held on Thursday, May 11, at the company's headquarters in Riyadh.           

Mr. Al-Fawaz explained that Tasnee is continuing to achieve positive results despite the high financing cost. The Tasnee restructuring program has achieved performance improvements which have resulted in high production and improved sales, as well as the improvements from the cost optimization initiatives that have covered administrative and marketing expenses.

The company has successfully completed the restructuring program which has enabled it to redesign the company's organizational structure to a model of strategic business units, increasing work efficiency, improving performance and reducing costs. In addition, all shared services, including human resources, procurement, information technology and public services, have been unified under one shared services unit, which enhances the company’s organizational and negotiating capabilities. Furthermore, Tasnee’s manufacturing excellence program has had a positive impact on performance, cost reduction, improved operating rates and the breaking of production records at many of our plants.

Tasnee is working on completing a series of projects, such as the titanium sponge project in Yanbu, the commercial startup of this is expected to be during the second half of this year. There is also the titanium smelter plant which will produce raw materials for a number of titanium industries. This is in addition to the downstream projects within the manufacturing complex for plastic industries in Hail, for which the test operation phase in most of the production lines has already started; this project will provide more job opportunities and more value to Tasnee’s manufacturing operations.

Additionally, depending on its advanced research capabilities, the company has developed and improved many existing and new products in both the petrochemical and chemical strategic units.

The company has also made some achievements in environment, health, safety and security through collaborating with different business units to develop unified standards for environment, health, safety and security and raising awareness to avoid work accidents among employees.

The company has completed all the requirements for the transition to the International Financial Reporting Standards (IFRS) across all its subsidiaries. This will have a positive impact on the standardization of accounting policies and procedures and improve the disclosure and transparency process. Notably, the transformation of international standards has impacted the measurement methods, presentation and disclosure of the consolidated financial statements for the current and comparative periods, in accordance with the requirements of the international financial reporting standards implemented in Saudi Arabia. This includes re-measuring employees’ end of service, measuring income, plants consumption and equipment, classification of some spare parts and changing the method of consolidating the financial statements of some of the major companies from full consolidation to equity consolidation.

On the subject matter of the definitive agreement to acquire the company's Titanium Dioxide business by Tronox Limited, in return for $1.67bn in cash and a 24% stake in the new entity, Eng. Al-Fawaz stressed the importance and size of the deal as the new company will be the largest titanium dioxide company in the world, according to the volume of sales of titanium chemical products and others.  It will be the most diverse and integrated titanium dioxide company, giving it greater capabilities to meet customers’ needs.

The deal will also allow the Tasnee to re-focus on petrochemical activity and seek new strategic investment opportunities. Additionally, the transaction proceeds will improve Tasnee finances and significantly contribute to reducing the loans ratio compared to profit before depreciation, financing costs and taxes which will be after paying all Cristal bank debts in Saudi Arabia.

Tasnee registered a consolidated net profit of 103 million riyals for the first quarter ending March 31, 2017, compared with a net profit of 65.8 million Riyals for the fourth quarter of 2016, and a net loss of 104million riyals for the same period of 2015.

Al-Fawaz attributed the positive results compared to the same quarter of the previous year to the increase in average selling prices of some products and increments in other income despite the increase in selling and financing costs and marketing expenses.

Furthermore, the total value of sales for the first quarter of 2017 is 2.48 billion riyals, compared with 2.08 billion riyals for the same period of 2016, an increase of 19%. The company achieved operating profits during the first quarter of 340 million riyals compared with a net profit of 52 million riyals for the same period of 2016.​​​​