RIYADH’S CONSTRUCTION BOOM SIGNALS OPPORTUNITIES

The Saudi Robotics Conference recently concluded in the industrial city of Jubail, highlighting the next level for the manufacturing sector, which authorities are keen to exploit.

The event focused on smart manufacturing, especially developments in robot automation, the case for industrial robots, future technology and skills gap, and robot application safety, among others.

From traditional industrial applications to cutting edge new technologies, companies are finding new ways to automate every process to gain efficiency, boost productivity and cut costs.

A key example is the Arabian Robotics Company, which is developing robotic solutions for industrial applications, providing competitive robotic solutions and services and commercialising and building alliances with leaders of robotics technology.

The company has licensed SAIR, an industrial grade inspection robot invented by Saudi Aramco. In 2016, the invention was developed at King Abdullah University of Science and Technology (KAUST). SAIR has been field tested at various Saudi Aramco facilities, including tank farms and terminals, gas oil separation plants (GOSP), and refineries.

Similarly, Saudi Elenex, the international trade exhibition for electricity, alternative energy, lighting, power generation, and water, also saw new deals in high-end manufacturing. During the event, the Ministry of Energy, Industry and Mineral Resources launched seven solar PV projects with a capacity of 1.52 GW and a direct investment of USD 1.51 billion.

The Public Investment Fund (PIF) is also eyeing new manufacturing industries. The Saudi Investment Recycling Company (SIRC), a fully owned unit of the PIF has acquired Global Environmental Management Services (GEMS), from Jadwa Waste Management Opportunities Fund, which is managed by Jadwa Investment.

“SIRC was established by PIF in 2017 as part of the fund’s strategy to develop new sectors within Saudi Arabia,” according to the company.

The company is charged with the mandate to develop, own, operate and invest in waste disposal and treatment and spearhead state-of-the-art treatment and recycling facilities and waste-to-energy solutions as part of the National Renewable Energy Programme.

“In addition, SIRC will be acting as the national champion in the waste management sector by creating a range of opportunities for private sector participation, investing in companies across all waste streams and value chains, and identifying opportunities to invest in and localise proven and scalable technologies,” the company said.

The deals are part of the National Industrial Development and Logistics Programme is also seen as a boost for the manufacturing sector.

The NIDLP aims to raise the GDP contribution of manufacturing and logistics to USD 320 billion by 2030, stimulate investments worth more than USD 426 billion, and increase the volume of non-oil exports to over USD 260 billion over time.

At a major event introducing NIDLP earlier this year, the kingdom signed memorandum of understandings with French aerospace and defence company Thales and CMI of Belgium in military industry co-operation.

The Saudi Export Development Authority and the Saudi Industrial Development Fund also reached a financing agreement worth USD 840 million for the construction of the Trans-Saudi Arabia plant in Jazan for basic and transformational industries, one of China’s flagship Belt and Road Initiatives.

The established segments of the manufacturing sector is also showing signs of hectic activity. The cement sector, for example, is revving up again as the kingdom unveils a spate of new projects.

In the first quarter, Saudi Cement Co. led the way with a net profit of SAR 132.4 million, which was 7% lower year on year, but 6% higher compared to the previous quarter. The company saw its sales jump to SAR 390.4 million in the quarter, an 18.24% increase compared to the same period last year.

However, the company noted that its selling, distribution and administrative expenses were unexpectedly higher, apart from “increase in Islamic financing charges and decrease in share in net results of associates”.

Meanwhile, Yamama Cement Co. posted a net profit of SAR 73.8 billion, a 196% increase over the previous quarter. Sales surged 51.5% to reach SAR 213.8 million in the quarter.

The company also managed to increase its selling prices to SAR 207 per tonne in the first quarter of 2019, compared to SAR 155 per tonne in the fourth quarter of 2018.

Similarly, Yanbu Cement Co. posted a strong 81.2% increase in net profit in the first quarter on the back of a 20.5% surge in sales revenues.

Southern Cement Co., however, saw a 7% drop in net profit, even as revenues rose 18% during the quarter.

The largely improved results have helped an industry that has gone through muted growth over the past few years, as the government rationalised projects and streamlined developments amid a major restructuring of priorities.

Cement companies should also be buoyed by new projects, such as the USD 500 billion Neom City, and four new entertainment and leisure mega developments across Riyadh City valued at around USD 23 billion.