Building materials manufacturer Saudi Steel Pipe Company (SSP) has reported an annual net profit decline of almost 1,000% following multimillion-dollar impairment losses and reduced profitability in its titanium- and steel-making joint venture with Korea’s TSM Tech in 2018.
According to its financial results for 2018, the engineering and construction steel supplier reported a net loss, after zakat and tax, of $45m (SAR168.7m) – a 983% decline compared to 2017, when SSP posted a net profit of $5m (SAR19m).
Annual revenues, however, posted only a minor decline of 7% during 2018, with the group bringing $172.3m (SAR646.2m) in cash last year.
A $22.2m (SAR83.14m) loss by subsidiary TSM Arabia – a process equipment manufacturer established in 2011 between SSP (70%) and South Korea’s TSM Tech Company – was also cited as a factor behind the firm's losses in its missive to Saudi bourse Tadawul.
TSM Arabia's amount includes a $13.9m (SAR52m) loss based on an independent evaluation study.
A decline in the financial performance of associate firm Global Pipe Company also dented the group’s profitability, alongside a “decrease in project deliveries for pipes due to delay in raw material deliveries”.
Increasing raw material prices in 2018 further resulted in lower margins, SSP said.
SSP has factories in Saudi Arabia’s Eastern Province and operates five production lines in the region, where it manufactures pipes that are primarily sold in the kingdom’s oil and gas sector.
The steel company's 2018 financials follow news that Luxembourg-based pipeline producer Tenaris had bought a 47% stake in SSP to expand its presence in the kingdom, where it sells to industry giant Saudi Aramco.
Tenaris started to consolidate the results from SSP from 21 January, 2019.