Saudi Paper focuses on quality, long-term profitability: CEO

Yousseri Elbishry,, CEO of Saudi Paper Manufacturing Co., expects the company to maintain its positive performance during the second quarter of 2025, with stable revenue levels due to steady demand in both local and export markets, as well as effective pricing policies.

In an interview with Argaam, Elbishry said the company is continuously working on improving profit margins through controlling costs, enhancing operational efficiency, and benefiting from contractual discounts with raw material suppliers. He expects this to gradually reflect in increased profitability in the upcoming periods.

As for financial results, the CEO indicated that the Q1 2025 profit decline was due to several operational and economic factors.

The paper remanufacturer saw an increase in natural gas costs after Saudi Aramco raised prices. Diesel prices rose to SAR 1.66 per liter as of January 2025, compared to SAR 1.15 in 2024, an increase of more than 44%. This directly impacted operating costs and the transportation of raw materials and finished products.

The volatility in raw material prices, especially pulp, which increased globally, led to a rise in production costs and negatively affected profit margins, given the difficulty in passing on these costs to converting companies and ultimately to end consumers.

The fluctuations in foreign exchange rates affected the company’s existing obligations and increased the import costs of some foreign purchases, which added to expenses without a corresponding increase in revenue.

Elbishry emphasized that the company focuses on a strategy of quality and long-term profitability rather than solely chasing revenue growth.

He highlighted that the year-over-year (YoY) revenue decline was due to the company's strong focus on higher-margin products, which may lead to a decrease in sales volume but with better profitability.

The CEO also shed light on shifts in target markets, noting that expansion into new markets may require longer periods to achieve sustainable growth.

Sales of paper rolls reached 31,500 tons in the first quarter of 2025, while sales of converted products amounted to 1.65 million cartons, with exports accounting for 14.1%.

When asked about pulp and raw material prices and their impact on the company’s profit margins, the top executive said pulp prices rose by about 7% YoY in Q1 2025, thanks to strong demand, which directly increased production costs.

As for other raw materials, the prices of packaging materials and cartons in Saudi Arabia rose by approximately 3% during the same period, which negatively affected the company's operating profit margins, particularly for converted products.

Elbishry reiterated that the aforementioned reasons contributed to the decline in profit margins, especially due to the difficulty in passing on these costs to converting companies and ultimately to end consumers.

According to Argaam data, Saudi Paper’s earnings fell to SAR 20.7 million in Q1 2025, a 43% fall from SAR 36.3 million a year earlier.