Saudi Economy: Investment in Production Sector Has Raised its Sales by 6.8 Billion Dollars in One Year

Sales from Production Investment Companies sector listed in the Saudi stock market have risen to 25.5 billion Riyals (6.8 billion Dollars), from 24.7 billion Riyals, in the previous year, an increase of 3.42%.

Net collected profits for this sector decreased by 50% to 1.51 billion Riyals (400 million Dollars). Companies' losses during the fourth quarter of last year was 100 million Riyals, compared to profits of 598 million Riyals during the previous year.

The sector came in fifth place amongst market sectors outstanding stocks, which reached 143 billion Riyals, a 9% portion; while circulating assets of the sector's stock reached 3.77 billion shares, a 6% portion of the total; resulting from 2.63 million transactions, forming 9% of total executed transactions.

The index losses last year was 3%, or 165 points, reaching 6428 points compared to 6593 points at the end of 2014. The highest gains for the index were 8.64%, equal to 505 points, raising the index to 6355 points at the end of last August. The greatest loss reached 9.07% at the end of dealings, on the 23rd of last August, with the index reading 6302 points. The Saudi Arabian Mining Company (Maaden) was at the forefront of the sector's companies with sales totaling 11 billion Riyals, making 43% of the sector's sales, compared to 10.8 billion Riyals, in 2014, an increase of 1.52%.

Despite the rise in the company's sales, its profits during 2015 fell to 605 million Riyals, compared to 1.36 billion Riyals during 2014. The company related the fall in profits to the decrease in average sale price for all products except for Di-ammonium Phosphate fertilizer, in addition to the rise in cost of sold products, due to the increase in sold quantities, and a rise in the associated costs of selling, marketing and financial strains, because of the initiation of commercial production of Aluminum Ores Company in September 2014.

Maaden recorded losses during the final quarter of last year of 5.65 million Riyals, compared to profits totaling 376 million Riyals during the fourth quarter of 2014 and 80 million Riyals during the past quarter. The Saudi Chemicals Company garnered 9.4% of the sectors sales, equal to 2.4 billion Riyals, compared to 2.48 billion, making a decrease of 3%, with a reduction in net profits to 252 million Riyals, from 284 million, in other words 11.2%. The earnings per share fell from 4.48 to 3.98 Riyals. Gross profit fell 2% to 493 million Riyals, compared to 503 million Riyals. Operating profits fell by 10% to 283 million Riyals, compared to 315 million Riyals. The company related the decrease in profits to a drop in sales and a rise in operating costs. mainly due to taking special entitlements for receivables, in order to improve the company's financial status.

Financial statements show the acquisition of Al-Hassan Ghazi Ibrahim Al-Shaker Company (Shaker) over 7.4% of the sector's sales, equivalent to 1.89 billion Riyals, compared to 1.56 billion, an increase of 21.2%, with a decrease in net profits to 136.5 million Riyals, compared to 437 million, or 68.75%, as well as a fall in share's dividends to 2.17 Riyals from 6.93 Riyals. Operating profits fell to 91.4 million Riyals compared to 110.2 million or 17%, while gross profit rose by 13% to 435 million Riyals.

Meanwhile Saudi Pharmaceutical Industries and Medical Appliances Corporation acquired 13% of the sector's profits, garnering net profits of 357 million Riyals in 2015, compared to 317 million during the previous year. This coincided with a rise in share's dividends to 2.98 Riyals from 2.94 Riyals. Gross profits rose by 5% to 832 million Riyals from 795 million. Operating profits rose by 8.3% from 242 million Riyals to 262 million Riyals. 

Net profits for Abdul-Latif Industrial Investment Company was 139.3 million Riyals compared to 200.4 million, a fall of 30.5%. Gross profits fell by 21% to 208 million Riyals, with a share dividend of 1.71 Riyals, compared to 2.47 Riyals. In addition, operating profits fell to 159.4 million Riyals, compared to 210 million, a decrease of 24%. The company related the decrease to a fall in sales and an increase in consumption and production costs, as well as failing to reach required profits from estate investments, due to them not being sold, in addition to losses as a result of investment in an associate company, and an increase in financial charges and Zakat allocations.