|FIPCO achieved net loss of SR 6.7 million during the first half of 2021, compared to net profit of SR 0.825 million for the corresponding period of 2020 because of the following:
1- Decrease in gross profit resulted from sudden and ascending increase in the main raw materials prices, in addition to the increase in production costs due to increase in the minimum wage for Saudi employees, in spite of growing turnover for both FIPCO & FPC.
2- Expected credit losses provision has been increased for FPC in accordance with IFRS 9, because of growing turnover and the ongoing credit relationships with some strategic clients as well as delayed due payments for some clients, on the other hand, Reversing of the credit losses provision in FIPCO due to the absence of its purpose, as main due amounts were collected and the credit relationships was redesigned with some clients.
3- Selling and distribution expenses are higher because of increased shipping price globally as well as the expansion of opening new branches in several regions for the subsidiary (FPC) inside and outside Saudi Arabia.
4- General and administrative expenses are higher as a result of making provisions and hiring new cadres in spite of increased production capacity in FPC.
5- Decrease in other income arising from impairment of capital assets for low economic viability and replacing with new highly efficient assets, which will positively affect production capacity during the first half of 2021.
6- Increase in Zakat provision based on a forecast of the short term loans will be included in Zakat calculation in case of continuous governmental initiatives, particularly the initiative of deferred payment program related to postpone the due payment with no interest up to the end of 2021.
These results achieved in spite of:
1- Decrease in banking charges as a result of the governmental initiatives (represented by SAMA) in order to minimize the impact of the coronavirus outbreak (Covid-19), particularly the initiative of deferred payment program related to postpone the due payment with no interest.
2- Realized gains of investments at fair value through profit or loss.