Tasnee swings to SR103.9m profit

Saudi Arabia's National Industrialization Co. (Tasnee) expects further job cuts to come but is seeing the benefits of a restructuring effort which has already resulted in the firm shedding more than 25 percent of its global work force.
The remarks by Chief Executive Mutlaq Al-Morished came after the maker of plastics, chemicals and titanium dioxide halted a run of five straight quarterly losses to return to profit in the second quarter of 2016.
Tasnee's earnings have been hit hard by falling product prices, like many petrochemical firms in the Kingdom, as they are closely tied to slumping oil prices. In response, the company launched in April 2015 a restructuring effort aimed at significant cost cuts and efficiency savings.
Al-Morished had said in January that the firm was not expecting to see the benefits of its cost-cutting program until the end of 2016, although he told a press conference on Tuesday that most of the work had now been completed. "We have now achieved most of it, if not all, and the cost of (the restructuring) we have paid in the previous year and last quarter. Now we're coming slowly to the end of it," Al-Morished said.
When asked about any further job cuts, Al-Morished said: "I expect some, but it's not going to be in the tens (of percent). It's going to be single digits." This would be based on workforce levels after existing staff reductions, he added.
The firm was also improving the efficiency of its plants, which were producing almost 10 percent more products than they were in the second quarter of 2015, with production costs per tonne falling 20 percent over the same time period.
These factors helped Tasnee report a net profit of SR103.9 million ($27.7 million) in the three months to June 30, compared with a loss of SR107.7 million in the prior-year period and well ahead of analysts' expectations. Tasnee's shares were down 1.5 percent by midday, having risen in earlier trade, as the broader stock market slipped.
Al-Morished also said Tasnee was in talks with local banks to refinance around SR6 billion of mostly short-term bilateral facilities into one longer-term instrument.

Source: Arab News