By Abdul Rawuf
Mohammed Abdul Aziz Al Rajhi Holding Group is one of the largest firms in Saudi Arabia. CEO Abdul Aziz Bin Saleh Al Aboudi, tells us what the future holds for business in the KSA
How do you see the future demand in Saudi market for steel and construction supplies?
The Saudi market is dynamic, flexible and adapts to changes in accordance with the consumer requirements, such as the steel market and construction supplies where there is an improvement in demand for steel, and it is expected to increase five percent annually.
Steel companies are marketing and selling all their products in the local market, and there will be a strong and real recovery in the coming years thanks to large-scale projects implemented by the state and the private sector, and the huge budgets the kingdom has, as well as the new housing projects planned to set up by the state and the private sector. The market will see prices improve led by demand growth.
How will you be funding your expansion? Will it be by the group or through financing debt?
Expansion is funded by both ourselves and the banks. The company obtained a loan from some banks to finance the projects that have high commercial and financial returns, which indicates that the company has a strong position, both physical and commercial, according to the company’s history and its good performance considering financial, productivity and marketing results, which were achieved in the darkest circumstances experienced by the global, regional and local economy recently. That is demonstrated by the excellent relationship with all Saudi banks, which trust the company and its capabilities in the long term. There is no doubt that these projects will benefit the kingdom’s economy and the shareholders, as well as those projects will open up more opportunities for Saudi youth to engage in the national labour market to promote and invest their capacities and abilities in a professional way.
There are a number of infrastructure projects in Saudi. Does that affect the increase in demand?
The development witnessed in the kingdom in all fields and the increasing spending on projects that affect the life and prosperity of the Saudi citizen, means that the care and follow up by the government, and supervision of the implementation on time, will have a positive impact. It will also bring comprehensive economic growth and development, and lead to a high demand, while the industrial cycle will go faster, larger and with greater stability, which creates upward economic movement, so that the impact will be reflected not only on everyone in the kingdom, but also in the region and the world in general.
How do you see the competitiveness between you and SABIC considering the type of product and prices?
There is no doubt that the existence of competitors in the market has a positive impact for the benefit of the citizen and the market in terms of quality of products, services and prices, and that is the nature of competition between the company and SABIC, which is, no doubt, a great company and has pioneered the establishment of the iron industry in the kingdom. But the nature and needs of the market give the opportunity for all to enter into it, and that opens competition to provide a variety of quality products. We are positive toward SABIC and that makes a motive to both parties to provide its best for the consumer.
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How do you see the activity of the company locally and in the Gulf?
Mohammad Abdul Aziz Al Rajhi & Sons Holding has a foothold in the Saudi,, the Gulf and Arab markets for more than 43 years, and it has also expanded to other world markets trusting its capacity and competitiveness in providing products that meet the needs and requirements and desires of consumers, where it worked in accordance with the vision of the founder Sheikh Mohammad Abdul Aziz Al Rajhi, which is summarised in the rule: “Where the consumer’s need, the company is providing.” This is clearly evident in the manufacture of heaters, for which the company was the first producer in the Gulf in 1968, then air conditioners and desert coolers, refrigerators and ovens in 1973. Later on other factories followed and now we have a total of more than 27.
What are the markets that the company is looking forward to work in?
The company works currently in the markets of Saudi Arabia, the Gulf, Yemen, North Africa and some African countries. We’re looking forward to gain access to the markets of Europe and Asia. The subsidiaries studied some of the markets in some European and Asian countries, through the company’s strategy, and had positive results to start marketing in those countries, and signed a number of agreements with some distributors to distribute our products in these countries.
How do you see the Qatari market in the future with the approach of starting new projects there after Qatar winning the bid of hosting the 2022 World Cup?
Qatar hosting the 2022 World Cup has a positive impact on the market and manufacturers; it will provide a leap in demand for construction and various consumer products, to meet the requirements of the Qatari market to complete the infrastructure requirements, therefore I think that the event is a new opportunity we have, in addition to what is available to us of the growth and prosperity in the Saudi market during the Ninth Development Plan adopted in Saudi Arabia.
How will the mortgage law have an impact to expand markets and increase demand for your products?
The mortgage law decision and its eventual adoption will facilitate the transfer of property ownership between banks and real estate companies. As a result, developers and individuals will be covered by legal process when any of the beneficiaries of the real estate falters in payment.
The work of contracting companies will expand and grow, largely in the construction of banks, real estate companies, individuals, developers, and the public sector to benefit from government spending and the policy of high and flexible lending in the various fields of development, to build houses, buildings for offices, business and services, such as schools, hospitals and roads that follow habitually the real estate development.
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Do you think that the banks will offer a flexible policy considering the issue of financing real estate projects after the recent measures of ownership in the kingdom?
Surely the banks will turn into a flexible policy in the field of lending, to win a share of the construction and building market, in the light of the offers that are made by the government to build houses for the citizens by raising the ceiling of lending and facilitate the process of obtaining the loan, and the payment.
As a result the construction market will see growth and prosperity and the citizen will be encouraged to own his private residence.
What is the policy of your company on Saudisation?
The company is interested in the issue of Saudisation and technology localisation and has placed considerable attention on the percentage of Saudis in the company, which has exceeded what we wanted significantly. And in line with the state’s interest and guidance with regard to providing opportunities for Saudi young people, to give them a chance to work, the company has held partnership agreements with the National System for Joint Training and Human Resources Development Fund to train and employ Saudis, who are their candidates and rehabilitate them technically and administratively to have leadership, medium and low positions, as well as a project which will include an establishment of a technical and technological institute. It aims to train graduates of secondary schools and industrial colleges in order to raise the proportion of resettlement and employment of Saudis.
Have the economic changes effected the work of Al Rajhi Steel Industries?
Al Rajhi Steel Industries has carried on following its strategic plans, which has enabled it to ride out the market fluctuations over the past years, with an efficient, successful, and suitable profitability, which has reinforced its presence in the market and enabled it to expand and invest in areas of its fields effectively.
How does Al Rajhi Steel Industries balance between meeting the local market in Saudi and exports?
Al Rajhi focuses on proliferation, expansion and marketing in the local market. The Saudi market is characterised by growth, and prosperity and absorbs all that is produced by the company. Exports represent no more than five percent of the volume of production of the company.For all the latest construction news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.