Abdullah Ibrahim Alkhorayef, CEO of the Alkhorayef Commercial Company and the Alkhorayef Industrial Company shares his insights on Saudi’s economic markets and Vision 2030.
How has Saudi’s Vision 2030 changed the direction of the Alkhorayef Group, and how are you supporting this vision?
Vision 2030 is a very pure, clear direction for all companies, and our group and subsidiaries understand the necessity of aligning with it. When it comes to our product mix, we are very lucky because most of it would be ad hoc to whatever is in the vision.
For example, our work in the marine leisure market aligns with the government’s tourism program, which is seeing a huge rise in demand. When we relate this to Vision 2030, our work in the sector is going to be adding value to the tourism sector and the culture, and it will contribute to increased quality of life for citizens and residents in Saudi Arabia. It is definitely a change of strategy and an alignment with the vision.
What you would say have been the Alkhorayef Group’s biggest challenges this year?
The common challenge that everybody had was not being able to do business and carry out meetings face-to-face, or to travel and connect to the world as we were used to.
Based on the ambitious plans that we had in late 2019, we started 2020 with large inventories and production capacity, assuming that the economy would excel this year. However, lockdown created a lot of pressure in terms of the utilization of assets, production, and cashflow.
We have been suffering more psychologically than physically, which had a negative impact on the supply chain. Cashflows were definitely one important element that we tried our best to manage, and I would say we did it very well. Also, sales in June were a matter of survival for everyone. We managed to get rid of most of our inventories at that time. We oversaw the negative months coming later on, and we did not have excess baggage in July and August.
Although we faced these kinds of challenges, the results were quite good. Our new normal now is based on more efficiency and focus.
How much of your business is international? And how do you see Saudi Arabia strengthening its presence on a global stage when it comes to international partnerships and contracts?
The percentage of our international to local business varies. For example, one of our irrigation systems factories has been selling more than 95% of its production internationally. We have also started selling our GULFPOWER Diesel Generators globally. In our oil and agriculture businesses, we have been international for quite some time. Due to the pandemic, countries have now invested more in their own agricultural businesses, and this has grown our international sales.
As to Saudi’s role, the new market legislations and incentives of the Ministry of Industries are supporting the whole industry and ecosystem in terms of exports programs. Today, I think we have the ability to increase the number of sales internationally through the programs that the government has implemented to help us sell regionally for the time being, and then globally.
How are you using new technology to improve your services in agriculture and other divisions?
We are very advanced in terms of technology. In the agriculture division we have what we call an “I-Control Panel,” which is a smart device that we install within the pivot systems that we manufacture. Thanks to AI, the panel allows us to calculate a lot of data, which we collect later to use in agricultural production. We also have very typical remote-control operations, which we use to control the water sprinkler pressure systems remotely.
Within the group itself, we have now a project that we launched for robotics in manufacturing facilities, which include robotic welding and more advanced robotic systems. In our marine and land products division, we have an e-commerce platform where you can buy our products through the Alkhorayef electronic commercial shop.
We are also developing an e-commerce platform, so our dealers and distributors will no longer need to contact us. It is going to be a very simple transaction between the end user and our system. We are very serious about our digitalization and information systems.
What are your predictions for your industry over the next year and what concerns do you have?
The Saudi Telecommunication Foundation is very well advanced in terms of infrastructure. During the pandemic it succeeded in keeping systems and communication going without interruption.
As to the future, first, the pandemic is still here, and we cannot neglect this fact. Second, the oil prices are still low. And finally, the U.S. political system will have a global impact in the last quarter. So, we cannot raise our hopes, but we should not be pessimistic. It is just a matter of controlling the last quarter of this year in a smart way.
We are finalizing our budgets and we have different scenarios. The majority of these are more optimistic because we know that people tend to spend more after a crisis. The demand is there, we still have projects ongoing, and the economy is providing very good, secured payments. The cash and the ability to invest are also there. All of these are good elements that help us to be optimistic.
Source: Forbes Middle East
