MESC sees revenue sink over Q4 and full year
Cable manufacturer takes double hit of competition and sour venture
Middle East Specialised Cables has posted a net loss of almost SAR 100 million for the fourth quarter and almost as much for the full year as a higher competition and a sour venture in Jordan drain revenue.
The maker of cables for MEP installations said a net loss of SAR 99.2 million was an increase from the SAR 67 million loss from the same period in 2009. For the same period, gross profits fell 55.6% to SAR 11.1 million and an operating loss of SAR 13 million reversed a SAR 14.62 million profit the previous year.
The company also revealed a net loss for the twelve months SAR 94.9 million, compared with a net profit of SAR 51.3 million for 2009. Operating profit fell more than 92%, to SAR 8.7 million. This put the brakes on the SAR 4.3 million in net profit for the first nine months of 2010.
“The reason for the decline in both gross profit and net losses to the decline in the evaluation of goodwill associated with investing in the cable company of Jordan (a subsidiary) in addition to continuing intense competition between cable manufacturers, which was the result of the emergence of a number of new factories in the region, a negative impact on margins profitability of the company,” the company told the Tadawul in Riyadh yesterday.
Domestic competition derives from companies such as Saudi Cable Company, another publicly-listed firm, which produces its own copper. In the middle of last year the company won its first contract for 380 kV cables in Jeddah from Saudi Electricity Company, for SR100 million.
“There are only a few who have this capacity to produce cables of such high voltage,” Salim Rashid, marketing manager, told CW. He also cited the 1,500 km it is supplying to the latest phase of the redevelopment of Doha – the biggest cable contract in the region.
The company stopped exporting the 70,000 tonnes of copper rod it produces in order to fuel its own big orders, according to Rashid.
MESC shares closed down 1.12% to SAR 17.55 per share yesterday. The stock has fallen 46% in a year, though has broadly recovered since the beginning of December.