Tasnee swings to SR103.9m profit

Mutlaq Al-Morished
Updated 26 July 2016
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Tasnee swings to SR103.9m profit

RIYADH: Saudi Arabia's National Industrialization Co. (Tasnee) expects further job cuts to come but is seeing the benefits of a restructuring effort which has already resulted in the firm shedding more than 25 percent of its global work force.
The remarks by Chief Executive Mutlaq Al-Morished came after the maker of plastics, chemicals and titanium dioxide halted a run of five straight quarterly losses to return to profit in the second quarter of 2016.
Tasnee's earnings have been hit hard by falling product prices, like many petrochemical firms in the Kingdom, as they are closely tied to slumping oil prices. In response, the company launched in April 2015 a restructuring effort aimed at significant cost cuts and efficiency savings.
Al-Morished had said in January that the firm was not expecting to see the benefits of its cost-cutting program until the end of 2016, although he told a press conference on Tuesday that most of the work had now been completed. "We have now achieved most of it, if not all, and the cost of (the restructuring) we have paid in the previous year and last quarter. Now we're coming slowly to the end of it," Al-Morished said.
When asked about any further job cuts, Al-Morished said: "I expect some, but it's not going to be in the tens (of percent). It's going to be single digits." This would be based on workforce levels after existing staff reductions, he added.
The firm was also improving the efficiency of its plants, which were producing almost 10 percent more products than they were in the second quarter of 2015, with production costs per tonne falling 20 percent over the same time period.
These factors helped Tasnee report a net profit of SR103.9 million ($27.7 million) in the three months to June 30, compared with a loss of SR107.7 million in the prior-year period and well ahead of analysts' expectations. Tasnee's shares were down 1.5 percent by midday, having risen in earlier trade, as the broader stock market slipped.
Al-Morished also said Tasnee was in talks with local banks to refinance around SR6 billion of mostly short-term bilateral facilities into one longer-term instrument.


Oil prices near 2019 highs after US ends all Iran sanction exemptions

Updated 23 April 2019
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Oil prices near 2019 highs after US ends all Iran sanction exemptions

  • Iran’s main oil buyers initially received sanction exemptions
  • US reiterates its goal to cut Iran oil exports to zero

SINGAPORE: Oil prices were near 2019 highs on Tuesday after Washington announced all Iran sanction waivers would end by May, pressuring importers to stop buying from Tehran.
Brent crude futures were at $74.40 per barrel at 0239 GMT, up 0.5 percent from their last close and not far off a 2019 peak of $74.52 reached on Monday.
US West Texas Intermediate (WTI) crude futures hit their highest level since October 2018 at $65.95 per barrel before edging back to $65.89 by 0239 GMT, which was still up 0.5 percent from their last settlement.
The United States on Monday demanded that buyers of Iranian oil stop purchases by May 1 or face sanctions, ending six months of waivers which allowed Iran’s eight biggest buyers, most of them in Asia, to continue importing limited volumes.
Before the reimposition of sanctions last year, Iran was the fourth-largest producer among the Organization of the Petroleum Exporting Countries (OPEC) at almost 3 million barrels per day (bpd), but April exports have shrunk well below 1 million bpd, according to ship tracking and analyst data in Refinitiv.
Barclay’s bank said in a note following the announcement that the decision took many market participants by surprise and that the move would “lead to a significant tightening of oil markets.”
The British bank added that Washington’s target to cut Iran oil exports to zero posed a “material upside risk to our current $70 per barrel average price forecast for Brent this year, compared with the year-to-date average of $65 per barrel.”
ANZ bank said in a note on Tuesday that “the decision is likely to worsen the ongoing supply woes being felt with Venezuelan sanctions, the OPEC supply cut, and intensifying conflict in Libya.”
The move to tighten Iran sanctions comes amid other sanctions Washington has placed on Venezuela’s oil exports and also as producer club OPEC has led supply cuts since the start of the year aimed at tightening global oil markets and propping up crude prices.
Ellen Wald, non-resident senior fellow at the Global Energy Center of the Atlantic Council, said the United States “seem to expect” Saudi Arabia and the United Arab Emirates to replace the Iranian oil, but she added “that this is not necessarily the way Saudi Arabia sees it.”
Saudi Arabia is the world’s biggest exporter of crude oil and OPEC’s de-facto leader. The group is set to meet in June to discuss its output policy.
“Should OPEC decide to end their supply cut program going into the second half of the year, this could limit oil’s upside in the coming months,” said Lukman Otunuga, analyst at futures brokerage FXTM.
Meanwhile, the Atlantic Council said the US move would hurt Iranian citizens.
“We’re going to see their currency collapse more, more unemployment, more inflation,” said Barbara Slavin, director for the Future of Iran Initiative at the Atlantic Council, adding that the US sanctions were “not going to bring Iran back to the (nuclear) negotiating table.”