“Advanced” for Arabic: We expect record sales in the fourth quarter and enter Europe soon

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The CEO of Advanced Petrochemical Company - Advanced, Mamdouh Al-Omari, expected that the fourth quarter of the year would record historic sales for the company, supported by the disposal of accumulated inventory in addition to current production, in light of improving operational conditions and rising demand and global prices.

He said in an interview with Al Arabiya Business that the company succeeded in overcoming most of the repercussions of the shipping disruptions that affected its business during the past months, benefiting from the return of feedstock supplies to normal and the decline in prices, in addition to opening new supply routes and markets, with plans to expand in Europe and aim to reduce debt in the coming years.

Al-Omari stated that the company was able to achieve a noticeable improvement in the results of the third quarter, supported by the return of production rates to normal levels and the improvement of shipping operations, despite the continuing challenges associated with the geopolitical situation and the high costs of transportation and insurance.

Al-Omari added that the company's profits increased by about 40% compared to the previous quarter, explaining that this was the result of two main factors, the first of which was the return of production to normal levels, reaching about 120% compared to the previous quarter, and the second of which was the improvement in the efficiency of shipping operations after overcoming the delays that the company witnessed during the months of July and August.

He pointed out that geopolitical turmoil affected shipping movement during the third quarter, but the company was able to compensate for the shortage during the month of September, as it sold the equivalent of 75% of its production that month.

Regarding propane supplies, the main feedstock for the company’s factories, Al-Omari confirmed that the quantities returned to normal, and even exceeded previous levels, adding that feedstock prices declined during the third quarter by approximately 22% compared to the previous quarter, which contributed to enhancing profit margins and supporting the company’s return to profitability.

He explained that the company succeeded during the third quarter in diversifying its supply chains, as it opened new routes through Turkey for land shipping, in addition to benefiting from the ports of Dammam and Jeddah, which helped it reach broader markets and sell larger quantities of products.

Despite this, Al-Omari indicated that shipping and insurance costs are still high at levels close to those recorded in the second quarter, pointing out that the cost of shipping has risen to more than $200 per ton, compared to levels that were between $20 and $60 per ton before the outbreak of tensions in the region.

He said that the biggest challenge for the company during the recent period was not related to prices, but rather to disruptions in shipping and supply chains, noting that the improvement in global market conditions and the rise in product prices by about $400 per ton compared to their levels before the events helped offset the impact of high costs and achieve good profit margins.

Regarding performance expectations during the rest of the year, Al-Omari explained that the volume of sales during the first nine months exceeded 75% of the previous year’s levels, expecting the fourth quarter to be better than the third quarter in terms of sales and profitability.

He added that the company expects to record historic sales during the fourth quarter, benefiting from the disposal of accumulated inventory in addition to current production, in light of strong demand and improved prices.

He revealed that the company sold about 75% of its production during the third quarter, while 25% could not be sold due to shipping problems, indicating that the improvement that began in September continued during October, with the company recording numbers that he described as “excellent.”

Al-Omari confirmed that the demand for the company’s products exceeds usual levels, and even exceeds the demand recorded during the first quarter of the year, which supports benefiting from increased production capacity and higher prices in the coming period.

Regarding the debt, Al-Omari said that the company is committed to paying the due installments according to the specified schedules, indicating that its strategy focuses on maintaining the stability of operational operations, raising efficiency, and expanding into products with higher returns.

He explained that some specialized products achieve an additional return of more than $100 per ton compared to traditional products, which helped the company penetrate new markets and improve profitability.

He added that the company aims to reduce its debt by about 600 million riyals by 2027, compared to a total debt approaching 9 billion riyals currently.

Regarding foreign expansion plans, Al-Omari revealed that the company is close to signing agreements with three major European distributors to enter the European market through its new products.

He explained that the samples that the company sent to European customers achieved positive results, and he expected the commercial impact of these agreements to begin as of the fourth quarter, with the company’s sales in the European market reaching between 300,000 and 400,000 tons during the year 2027.

He stressed that the European market, which amounts to about 10 million tons, represents a strategic opportunity for the company, especially since the targeted products generate additional revenues exceeding $100 per ton.