Arabian Plastics Industries Company (APICO), a leading manufacturing company in Saudi Arabia, announced a significant strategic move: the renewal and expansion of its Sharia-compliant credit facility agreement with the National Commercial Bank (NCB), the Kingdom’s largest financial institution. Under the new agreement, the financing limit has been raised to SAR 60 million, reflecting strong confidence in APICO’s financial performance and future plans.
This agreement comes as part of the company's ongoing efforts to strengthen its financial position and support its ambitious development plans. According to the statement published by the company on the Saudi Stock Exchange (Tadawul) website, these facilities will be allocated for two main purposes: financing the working capital needed to cover daily operating expenses, and financing planned capital expansions (CAPEX) in the production lines. The financing details include a revolving facility of SAR 30 million, renewable annually, in addition to a one-time SAR 30 million facility with a 48-month term, secured by a promissory note covering the full value of the facility.
General context and importance of partnership
This partnership between APCO and the National Commercial Bank (NCB) exemplifies fruitful collaboration between the industrial and financial sectors in the Kingdom. APCO, established decades ago, has built a strong reputation for producing and manufacturing high-quality plastic products that serve vital sectors such as construction, agriculture, and packaging. Meanwhile, NCB plays a pivotal role in financing major projects and supporting national companies, aligning with the goals of Saudi Vision 2030, which aims to diversify the economic base and enhance local content.
Strategic objectives and expected impact
Through this agreement, Abico aims to achieve several strategic objectives that will enhance its competitiveness and achieve sustainable growth. These objectives are:
- Improved financing conditions: Obtaining better credit terms and competitive borrowing rates, which contributes to lower financing costs and improved profit margins.
- Maintaining healthy liquidity: Ensuring borrowing levels appropriate to the size of the company’s operations, providing sufficient financial flexibility to meet market challenges and seize available opportunities.
- Increase production efficiency: Invest in upgrading and expanding production lines by purchasing modern machinery and technologies, which will lead to increased production capacity, improved product quality, and reduced operating costs in the long term.
Domestically, this move is expected to bolster the Kingdom's manufacturing sector, create new jobs, and reduce reliance on imported products. Regionally, increased production capacity at APCO could open new export opportunities to neighboring markets, supporting the growth of Saudi non-oil exports and strengthening the position of Saudi products in the region.
