PIF allocated SAR 629.9 million to MEPCO for major expansion projects including doubling containerboard capacity, expansion in tissues, and the potential acquisition in the corrugator board market

PIF allocated SAR 629.9 million to MEPCO for major expansion projects including doubling containerboard capacity, expansion in tissues, and the potential acquisition in the corrugator board market

-MEPCO is playing a pivotal role in this expansion, with plans to add an additional 450,000 tonnes per year of capacity by 2026
-The PIF investment of a 23.08% stake in MEPCO enables to build on assets and expand to new levels of production which will create a landmark in the Company’s history

The Pulp and Paper Times

MEPCO (Middle East Paper Company) is a leading integrated paper solutions provider in the MENA region. They are the largest paper manufacturer in the area, with a strong focus on sustainability and innovation. MEPCO produces a range of paper products, including containerboard, specialty papers, and tissue products. A key strength of MEPCO is their vertically integrated business model. This includes their wholly-owned subsidiary. MEPCO delivers a diverse range of high-quality, sustainable products tailored to a wide range of requirements in packaging, tissue, construction, furniture, and paper core industries for its valued clients throughout Saudi Arabia and across the Company’s 33 export markets on 5 continents.

MEPCO’s strategy involves continuous growth and diversification, with investments in new production lines (like the PM5 for containerboard) and acquisitions to expand their product portfolio (e.g., in corrugated box manufacturing). They serve both domestic and international markets, exporting their products to numerous countries.

“As the largest integrated paper production business in the region, MEPCO continues to not only expand its core business but also penetrate and grow in new markets. Following a landmark investment from the Public Investment Fund (PIF) we have aligned our focus on geographic and product expansion, especially for packaging and specialised building materials, in addition to potential acquisitions in corrugator board products,” Mr. Musaab Al Muhaidib, Chairman of MEPCO Group said in the annual report of 2024.

As a result of the PIF investment, MEPCO will advance into emerging markets, improve operational efficiency, and create sustainability initiatives, in addition to driving forward integration as our TM6 and PM5 projects come online.

In a highly unstable business environment throughout the year, MEPCO produced a stellar performance to penetrate the most profitable markets at the most profitable times with the most profitable products. During a period where uncertainty reigned for many of our competitors, the Company has grown the tissue business to full capacity, increased market share, expanded operations, controlled costs, and improved efficiencies.

Closing 2024 with a total sales revenue of SAR 1.06 billion, up by 22.9% over the previous year, and gross profit of & SAR 107.6 million, an increase of approximately 146.4%, MEPCO’s strategic diversification was indicative of its market experience and intelligence. Furthermore, in order to negate more expensive raw materials, fuel prices, and shipping rates, we shifted focus from our export market to domestic sales which rose by 16%.

The 155% increase in tissue production from 19,884 thousand tons to 50,721 thousand, due to commercial production started from mid-2023 and gradually increased over the year. which enabled adjusted EBITDA to reach SAR 121 million, with the margin improving from 6% in 2023 to 11% in 2024.

Investing in expansion and experience:

MEPCO is playing a pivotal role in this expansion, with plans to add an additional 450,000 tonnes per year of capacity by 2026, building on the current 500,000 tonnes annual capacity of current operations, alongside a heightened focus on recycling and eco-friendly packaging solutions.

“The PIF investment of a 23.08% stake in MEPCO enables us to build on our assets and expand to new levels of production which will create a landmark in the Company’s history in terms of capacity, market reach, and value. More than that, the PIF’s portfolio also includes a vast number of businesses that have the operational and growth experience which will prove to be invaluable,” Mr. Rob Renders, Acting Chief Executive Officer of MEPCO said in the annual report of 2024.

The Public Investment Fund (PIF) allocated SAR 629.9 million to MEPCO for major expansion projects including doubling containerboard capacity, expansion in tissues, and the potential acquisition in the corrugator board market. The subsequent increase in working capital combined with loan repayments enabled us to post a healthy balance sheet, ending the year with a debt-to-equity ratio of 59.9%.

“Our previous achievements over 2.5 decades have positioned MEPCO as the largest integrated paper and packaging company in the Middle East and our expansion through the new SAR 450 million PM5 and SAR 90 million TM6 facilities will double our tissue and containerboard output. We will be entering a new era of production” Mr. Rob said.

“In addition, we will continue to prioritise operational efficiencies and cost control, as we seek new opportunities for forward integration through collaborations and acquisitions. Despite the economic and geopolitical headwinds we faced in 2024, we have demonstrated that MEPCO is a strategist as well as an industry leader,” he added.

Mr. Rob further said, that, at the core of our business since its founding in 2000, MEPCO’s paper and packaging operations continued to act as the fulcrum of our success. It was vital that our strategic movement away from overseas markets towards the Saudi base, reinforced our 30% local market share while operating at 95% capacity throughout 2024.

Financial results for the first nine months of 2025 ended on 30th Sept 2025 | Performance 

MEPCO successfully executed a major financial turnaround in 9M 2025, swinging from a substantial net loss of SAR 32.8m in the prior year to a significant net profit, which amounted to SAR 24.9m. This was complemented by a 5% increase in total revenue, which rose to SAR 813.2 m from SAR 775.4 m in the prior period, while Gross Profit saw a moderate increase of 3% to SAR 107.4 m (up from SAR 104.3 m). The most significant factor driving bottom line growth was exceptional cost management and the absence of one-off charges. The Group achieved a dramatic swing in Operating Profit, moving from a loss of SAR 17.9 m to a profit of SAR 42.2 m. The resulting Basic and Diluted Earnings Per Share (EPS) stood at SAR 0.29 for the period, compared to a loss per share of (SAR 0.38) in 9M 2024.

Musab Sulaiman Al-Muhaidib, Chairman of the Board of Directors of the Middle East Paper Company, commented: MEPCO remains at the forefront of Saudi Arabia’s circular economy, proudly marking over two decades of industry leadership. As we align our strategic priorities with the Kingdom’s ambitious Green Initiative and Vision 2030, we remain steadfast in our commitment to environmental sustainability and sustainable business development within the paper and recycled waste sectors.

The financial results for the first nine months of 2025 mark a powerful resurgence for MEPCO, reflecting the effectiveness of our strategic pivot towards operational excellence and cost optimization. Our successful transition from a net loss to a net profit of SAR 24.9 m demonstrates the inherent resilience and potential of our business model. We are committed to maximizing long-term shareholder value through disciplined financial management and targeted growth. As we continue to execute on our core manufacturing mandate, these results provide a solid foundation for the future, enabling us to sustain our industry leadership within the Kingdom and beyond.

Faisal Haddawi, Group President of the Middle East Paper Company, commented: Our strong performance in 9M 2025 is a direct result of relentless focus on efficiency and tight control over our cost base. The remarkable swing in our Operating Profit, reaching SAR 42.2 m, and 176% increase in Net Profit which reached SAR 24.9m from the SAR 32.8m loss the previous year, was driven by a significant reduction in General and Administrative Expenses, which decreased from SAR 87.8 m to SAR 64.6 m.

Looking ahead, we are simultaneously strengthening our operational core and investing for strategic capacity growth. The launch of the new Tissue Mill factory ("TM6") construction, a significant expansion project valued at SAR 350 m and expected to be completed by the end of 2026, highlights our commitment to securing future market share and diversifying our product portfolio. We remain dedicated to operational prudence and strategic investment to ensure MEPCO's sustained profitable growth
 

Web Title: PIF allocated SAR 629.9 million to MEPCO for major expansion projects including doubling containerboard capacity, expansion in tissues, and the potential acquisition in the corrugator board market