ADES to unveil new contract awards in coming period: CEO
ADES Holding Co.'s CEO Mohamed Abdul Khaleq said that there are a number of new contracts that will be announced sequentially in the coming period, adding that discussions on these contracts are on track.
In an interview with CNBC Arabia, the top executive stated that the company signed contracts worth SAR 3.6 billion during April and May, bringing its total projects backlog to SAR 29 billion, which is the highest in the company's history and also the highest at the industry level globally.
Regarding the renewal of a platform contract with Saudi Aramco for a period of 10 years, at a value of SAR 1.61 billion, the top executive said that the contract with Aramco was renewed with an increase of 20% over its previous value, noting that the company has about 33 contracts with Aramco.
Aramco represents about 70% of the total backlog, which amounts to about SAR 29 billion, Kuwait Oil Company (12%), Qatar (4%), Egypt (3%), and the rest is distributed among the countries of the world.
The change in the exchange rate of the Egyptian pound had no impact on the company's contracts in Egypt, ss they are in the US dollar, said Abdul Khalek, indicating that even if there are some operations carried out in Egyptian pounds, they are in accordance with the exchange rate of the Central Bank of Egypt, which gives the company a hedge against the decline of the currency.
The CEO also pointed out that ADES has about SAR 11.5 billion in debt, but the contracts backlog represents about three times the debt size, which enables the company to collect about SAR 14.5 billion from them to repay debts and distribute semi-annual cash dividends. He also stressed that the company currently has no intention of issuing Sukuk because the last financing secured by the company was almost not consumed, and there is still about $3 billion remaining.
Asked about the impact of reducing interest rates on the company, the CEO said that each 25-bps reduction in interest rates reflects positively on the company's profits by about SAR 15 million annually.
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