Mamdouh Al-Omari, CEO of Al-Mutakadema for Petrochemicals, expected the company to achieve additional return from producing copolymer at its new plant, as the company seeks to enhance its profit margins after recording a quarterly loss in the second quarter of this year due to rising costs.

The first loss recorded by the company after five consecutive quarters of profits in Q2 was mainly due to a 40% and 21% increase in feedstock (propane and propylene) prices, respectively.

But Al-Omari confirmed to Al-Eqtisadiah that the company deals with risks related to feedstock prices, product prices, and global demand as interconnected elements, relying on the margin between product selling prices and propane price as a key indicator for risk management.

He said the company is implementing an internal strategy to improve profit margins, based on rationalizing expenses, controlling operational costs, and raising operational efficiency, in addition to maximizing product value by expanding production of higher-yield products, supporting entry into new markets and enhancing profitability margins.

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CEO of Al-Mutakadema for Petrochemicals, Mamdouh Al-Omari

Mamdouh

The company recently expanded its product basket by starting production of copolymer at the new plant, a product with high demand in higher-yield markets.

According to Al-Omari, this plant allows the company to enter new markets and achieve additional return ranging between $40 and $60 per ton.

The plant of Al-Mutakadema for Poly (subsidiary) began contributing positively to Al-Mutakadema's results from the second half of last year, after the project raised annual production capacity from 600,000 tons to 1.4 million tons.

The plant reached full capacity by the end of last December, according to Al-Omari.

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Al-Mutakadema for Petrochemicals posted losses in Q2

Al-Mutakadema for Petrochemicals results in Q2

Propane pressures production and profitability

The CEO of Al-Mutakadema explained that production quantities during the current quarter were affected by a 55% decline compared to the previous quarter, due to reduced propane supplies during April and May 2026.

But he expected that the new plant would enhance the company's profitability in the coming periods, 'if profit margins continue at their current levels with stable production levels.'

However, he considered it difficult to predict price trends in Q3 amid ongoing geopolitical tensions.

Price decline may not affect profit margins

According to Al-Omari, the company observed a decline in selling prices in late June and early July compared to previous months.

However, he said that a decline in product prices does not necessarily negatively affect profit margins if accompanied by a drop in propane prices.

The company had announced in a statement on Tadawul that net selling prices rose 34% in Q2.

Although the rise in selling prices was offset by a 12% drop in sales volumes due to lower production from reduced propane supplies, the company recorded an increase in Q2 revenue.

Propane decline will boost profit margins

The average selling price rose 6% amid increased costs due to the geopolitical situation in the region, according to Al-Omari.

But the CEO of Al-Mutakadema indicated that the company's focus is on maintaining decent profit margins, while continuing to develop higher-profit products and expanding the customer base.

Al-Omari expected that the decline in propane prices and shipping costs would help maintain profit margins at the levels of Q2 of this year.