PIF-backed Sami expects 20% revenue surge in 2022 on more defence contracts, CEO says

Exclusive: Saudi Arabia's defence manufacturing company expects to break even in two years

Walid Abukhaled, chief executive of Sami, speaks at the Global Aerospace Summit in Abu Dhabi. Photo: Sami

Saudi Arabian Military Industries expects a 20 per cent surge in revenue in 2022, as it seeks to become one of the world's top 25 defence companies earlier than planned.

The state-run company, which recorded annual sales of 2.6 billion Saudi riyals ($693 million) last year, aims to break even in the next two years, chief executive Walid Abukhaled told The National on the sidelines of the Global Aerospace Summit in Abu Dhabi on Tuesday.

“We have an excellent and healthy pipeline of opportunities that we secured, we start to generate revenue and execute those contracts,” he said.

The company plans to hire an additional 1,000 employees this year — including engineers, technicians and support staff — swelling its workforce of 2,800 people as its business grows, Mr Abukhaled said.

Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, created Sami in 2017 to help reduce the kingdom’s reliance on foreign arms. As part of the country’s Vision 2030 plan for economic diversification, Sami’s mandate is to ensure more than half of the kingdom’s total military budget is spent locally by the next decade.

Sami, which had set a target to become one of the top 25 defence companies worldwide by 2030, could reach that goal a couple of years earlier as it rises up the ranks, its chief executive said.

By the end of 2022, it aims to rank among the top 70 defence firms globally, up from 85 currently, he said.

“We're talking about being [among the] top 25 companies with contracts that we actually execute and localise in the kingdom of Saudi Arabia,” he said. “It's not only about revenue, it's about actual execution and localisation of capabilities in the kingdom.”

While Sami is focused on catering to the requirements of the country's military, it is also open to opportunities to export its products.

“My absolute focus is to deliver on the requirement of the Saudi armed forces,” Mr Abukhaled said.

“There is huge opportunity in the kingdom. In 2016, it [had] the third-largest defence budget globally, so defence is huge.”

“That said … if there is an opportunity we're already working on in the kingdom and a friendly and neighbouring country asked for the same thing, then of course we would look into it and we would export it.

“I don't want to distract the execution of the strategic contracts we won and I want to focus on the kingdom. If there are opportunities that match what we deliver in the kingdom, I would welcome it.”

Sami is currently in talks over potential exporting opportunities and a deal could be announced before year's end, he said, declining to reveal details.

The company has various divisions including aerospace, land, sea, advanced electronics and defence systems.

The executive said higher oil prices are a boon for customers' defence budgets and that the company is not worried about rising inflation or higher costs, as its business plan is “rock solid”.

“I'm extremely happy with the demand we have in Sami and my focus now is on the delivery,” he said. “We call 2022 the year of delivery in Sami.”

The company said in March that it has secured 7bn riyals in funding through three separate banks for its future projects. The latest value of its orderbook is at 10bn riyals.

This will cover Sami's requirements for three to four years, Mr Abukhaled said.