Saudi Lime sole producer of sand lime bricks, meets 100% of local demand: CEO

Logo of Saudi Lime Industries Co.

Saudi Lime Industries Co. meets 100% of Saudi market demand for bricks and blocks. It is also the sole manufacturer of sand lime bricks, operating with a production capacity of 50,000 cubic meters annually, CEO Ahmed Elewa told Argaam in an exclusive interview.

The company also fulfills 50-60% of local market demand for lime products, which are used by most vital industries such as mining, petrochemicals, downstream, water treatment, agriculture, and foods.

Saudi Lime reported a 15% rise in 2022 net profit, compared to a year earlier. The better figures were buoyed by higher selling prices amid an increase in raw material and shipping costs, and the company’s cost control.

Saudi Lime is studying opportunities to acquire existing entities or expand its factories, Elewa revealed, providing more insight into the company’s production capacity, major contributors to revenue and profit, the impact of raw material cost on end products and the use of its IPO proceeds.

Here’s the full interview with Elewa:

Q: First, can you offer more insight into the lime and carbonate sectors and the industries that use them?

A: The lime and carbonate sectors serve as one of the key industrial sectors, on which most industries directly or indirectly rely. The most important sectors that use lime are as follows:

- Mining: Iron and steel producers, and the companies operating in minerals extraction such as gold, copper, titanium, etc.;

- Agriculture: Fertilizer producers, soil treatment firms, and animal feed manufacturers;

- Petrochemicals: Our major clients of paint and coating firms, and insulator manufacturers;

- Foods: Sugar producers, as well as silos and food industry firms;

- Water treatment sector, and downstream industries, such as glass and paper producers.

Q: How do you estimate the size of the brick, block and limestone sector in terms of production and demand in the Saudi market?

A: For bricks and blocks, we are the sole producer of sand lime bricks with the highest experience and production capacity, as we operate with a capacity of 50,000 cubic meters annually.

Saudi Lime meets 100% of demand for bricks and blocks in the Saudi market, given that it is the only manufacturer in the Kingdom.

For lime products, the company meets 50-60% of local market demand with a total capacity of up to 700,000 tons of calcium carbonate, 400,000-450,000 tons annually of quicklime and dolomite, and 100,000-150,000 tons annually of hydrated lime.

Q: How many mines does the company use in production? What about their production capacities and the company's strategic stock?

A: The company has a mine for the production of limestone with a capacity of 600,000 tons annually, and its strategic stock is estimated at nearly 11 million tons.

The company also has a mine for dolomite production with a capacity of 360,000 tons annually, and its strategic stock is estimated at around seven million tons, according to an internal technical study conducted by the company's specialized team.

Q: What is the company's market share from main sectors?

A: The company's market share ranges from 50% to 60% as a sales capacity.

Q: Which products contribute the most to the company's revenues and profit margins?

A: Sales of lime products has the lion’s share in the company’s revenues at approximately 63%. Quicklime is the top contributor to revenues with 46%, followed by hydrated lime with 16.9%.

Calcium carbonate products rank second, contributing 15.5% to total revenues.

On gross profit margins level, hydrated lime comes first with 63.5% of total, followed by dolomite with 49.8%.

Q: What are the historical prices of limestone? What is the percentage of its cost to end products?

A: Limestone prices range between SAR 17 and SAR 22 per ton. Its cost represents around 27% maximum for end products that do not require several production stages.

It also reaches nearly 10% minimum for end products that go through multiple production stages.

Q: How was the company's financial performance at the end of 2022 compared to 2021?

A: Saudi Lime managed to improve its financial performance in 2022 compared to 2021 by increasing net profit by around 15% minimum, due to higher selling prices for most customers due to high cost of raw materials and transportation. The company was also able to control its costs in 2022.

Q: How will the company use its IPO proceeds? What are your upcoming projects?

A: The net offering proceeds will be used to achieve several ambitious plans, to maximize benefit for the company and shareholders.

Future projects include expansions by replacing and adding new topnotch machinery to boost production value and realize the company's aspirations to acquire a larger market share. This will also help the firm offer new products and foray into new markets.

Saudi Lime also intends to implement preventive maintenance programs to keep its machinery and equipment in a good condition, which will contribute to narrowing losses from equipment breakdowns, as well as the expenses of maintenance and additional spare parts.

The company is looking for opportunities to merge with or acquire existing major entities, to maximize return for shareholders.

Q: What kind of opportunities targeted by the company for mergers and acquisitions?

A: We are studying plenty of opportunities to acquire existing entities whether startups or large companies, in addition to other opportunities for development and expansion in the existing factories to achieve the company's goals.