400,000 TPA: the new PM5 line is expected to double MEPCO’s overall production capacity and revenues

400,000 TPA: the new PM5 line is expected to double MEPCO’s overall production capacity and revenues

-MEPCO manufacture and distribute a wide range of high-quality containerboard and specialty paper products for the packaging, construction, and furniture industries

-Juthor tissue facility will satisfy 25% of the local market demand in its first phase of growth

-MEPCO’s largest-ever expansion, the PM5 facility, will be the fastest high-speed containerboard facility in the Middle East, adding an estimated production capacity of 400,000 tons

The Pulp and Paper Times:

The Middle East Paper Company (MEPCO) is the largest paper manufacturer in The MENA region. For over 2 decades, MEPCO has been on a journey of rapid expansion and diversification, while acting as a key driver of sustainability and the circular economy for the paper sector in the Kingdom of Saudi Arabia, in line with Saudi Vision 2030 and the Saudi Green Initiative.

Headquartered in Jeddah, MEPCO manufacture and distribute a wide range of high-quality containerboard and specialty paper products for the packaging, construction, and furniture industries across the Kingdom of Saudi Arabia and to over 50 markets globally.

In a remarkable period of progress, MEPCO’s total revenues of SAR 1.187 million in 2022 saw a year- on-year increase of 12.3%, leading to another record-breaking gross profit of SAR 503 million, up by a full 27.6%. Despite the global challenges of supply disruption, inflation, the Russian conflict with Ukraine, and the post-pandemic aftershocks, the Company has thrived in the face of adversity, using our market agility to supply the local market rather than focus on our international channels.

“Our strategic vision will strengthen our position as the leading paper and packaging producer in the Middle East and create even greater opportunities to reinforce our global presence, echoing Vision 2030 for the wider benefit of the Kingdom of Saudi Arabia. While we take giant strides towards our expansion targets, we will continue to adhere rigorously to the strict criteria of our strategic growth. For more than 20 years, we have understood our market, anticipated demand, delivered solutions, and contributed to the national economy. Our successes have consistently mirrored our objectives” stated by Mr. Musaab Al Muhaidib, Chairman of MEPCO in the annual report of year 2022.

On the future expansion plan, Mr Musaab informs that we continue to invest strategically for the future. The new PM5 production line is the largest expansion in our history, with the potential to double both our capacity and sales revenues; Juthor tissue facility will satisfy 25% of the local market demand in its first phase of growth. These are remarkable times for MEPCO as we build on our operational excellence, delivering a greater variety of products to our customers, more opportunities for our employees, and better returns for our Shareholders.

The annual reports said that with the PM5 facility, we will effectively double both our capacity and revenues in a growing market, widening the space between ourselves and our competitors exponentially. In addition, our investment in technology and digitization has been instrumental in our cost optimization and operational efficiency. Our cutting-edge digital solutions provide data-driven insights to ensure we are streamlined as an organization and innovative as a manufacturer, positioning MEPCO for strong and sustainable growth moving forward.

MEPCO will focus on lightweight containerboard grades, with a total investment of SAR 1.5 billion and an approximate internal rate of return of 15%. With an estimated production capacity of 400,000 tons, the new facility is expected to double MEPCO’s overall production capacity and nearly double the Company’s revenues.

“We began 2022 with strong market demand and continued to capitalize on the increase in commodity prices for the first 9 months of the year, leading up to the Ukraine conflict with Russia and the global pressure on national economies. Despite the ensuing downward trend in international paper prices, we maintained our stringent strategy of efficiency and cost containment, limiting the inflation of our cost of goods sold to just 3% this year while achieving a 12% increase in annual sales revenue,” stated by Eng. Sami Al Safran, Group president at MEPCO.

Mr Safran further stated, “Our aspirations are taking shape at a rapid pace. MEPCO’s largest ever expansion, the PM5 facility, will be the fastest high-speed containerboard facility in the Middle East, adding an estimated production capacity of 400,000 tons. While we focused our 2022 production largely in the domestic market, in order to avoid rising shipping costs and logistics challenges, our global presence continues to expand. With the PM5 technology providing a 100% increase in our containerboard capabilities, we anticipate a surge in new opportunities and new markets.”

“Looking ahead to 2023 and beyond, our Juthor plant will begin production, marking the start of a vast new revenue channel as we diversify our products as never before. We will continue to drive forward our PM5 project, which will transform the Company in terms of capacity and market expansion.” Mr Safran said.

In 2022, the Saudi paper market experienced robust development, emerging as one of the fastest-growing markets worldwide. It is projected to witness substantial growth from USD 2,206 million in 2023 to USD 2,709 million by 2028, representing a Compound Annual Growth Rate (CAGR) of 4.20% forecast over this period. This growth can be attributed to several factors, including an increasing emphasis on sustainability and a growing shift away from single-use plastic packaging towards alternative packaging solutions.

In an unsettling year of rising oil prices, global logistics challenges, and geopolitical unrest, MEPCO still achieved double digit growth across key results in the financial year through robust operational efficiency and the ability to respond to market dynamics with agility and persistence.

“Due to increased shipping costs and a disrupted supply chain, MEPCO focused more on the local market in 2022. This accounted for 60% of sales, while we remain safe in the knowledge that we have the agility, capacity and geographical advantage to renew greater emphasis on our international market with immediate effect,”  The report stated.

Market Expansion and Retention

MEPCO sales and marketing teams have been instrumental in its groundbreaking successes, expanding customer base with more than 50 local, regional, and international new clients as well as eveloping presence in the Americas.

MEPCO forged a series of alliances, including partnerships with Fastmarkets RISI and Fastmarkets FOEX to incorporate the GCC containerboard price index as well as the international price index to monitor changes in global industry prices more accurately and react accordingly.

In partnering with SAP, MEPCO are transforming and enhancing digital services, automating and aligning core internal business processes, broadening B2B customer experience, and deploying e-solutions. This will drive rich omnichannel content management and customization as we expand beyond our ever-growing footprint.
 

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