Liquidity is strong, flourishing; production at new plant began, another to follow in a month: Advanced CEO

Fahad Al Matrafi, CEO of Advanced Petrochemical Co.

Advanced Petrochemical Co.’s cash liquidity stands strong and is on the rise, bolstered by the trial run of one of the production lines at its new factory project, CEO Fahad Al Matrafi told Argaam.

The launch of another production line is expected next month, with a polypropylene output capacity of over 800,000 tons per year.

Al Matrafi highlighted that the new project will help boost liquidity by yielding additional output volumes, with the relevant financial impact likely to start showing in Advanced’s Q2 2025 results.

According to the CEO, Advanced does not intend to expand outside Saudi Arabia for the time being. It is currently focused on completing the new project, as per the outlined growth plan that the board reviews on a periodic basis.

Advanced’s improved Q1 2025 earnings came thanks to the 3% quarter-on-quarter (QoQ) increase in sales volumes. The three-month sales volumes also grew by 88% compared to Q1 2024, when the company’s plants had undergone the scheduled periodic turnaround maintenance activities, Al Matrafi said.

Additionally, net selling prices increased 4% QoQ and 2% year-on-year (YoY) by Q1 2025-end. Meanwhile, propane feedstock prices fell by 8% QoQ during the same quarter, he added.

The CEO noted that Advanced managed to not recognize losses from its share of investment in SK Advanced Co. in its Q1 2025 income statement, having already booked an investment impairment provision in 2024.

Regarding product demand, the company expects continued market recovery, considering the reduced freight costs in Q1 2025, paired with the typical seasonal propane price softness at the onset of summer, which should support the second-quarter financials.

He emphasized the need to monitor the recent global tariff-related decisions, given their potential impact on the market in terms of supply-demand dynamics, logistics, feedstock prices, and end products, not to mention their impact on inflation rates and, consequently, interest rate decisions.

On another note, Al Matrafi pointed out that Advanced Polyolefins Industry Co., a subsidiary, recently secured a SAR 3 billion loan from the Saudi Industrial Development Fund (SIDF) and another SAR 4.5 billion in commercial loans from several banks. These loans will be repaid using the abovementioned project’s operating cash flows.

The parent company, Advanced, has approximately SAR 2 billion in current debt. Al Matrafi stated that suitable financing options will be studied should any viable new project come the company's way.

Advanced reported a net profit of SAR 72 million in Q1 2025, recovering from a net loss of SAR 58 million in Q1 2024, according to Argaam’s data.