An important new territorial conquest SORMAT IS EXPANDING INTO SAUDI-ARABIA’S CONSTRUCTION MARKET

Saudi-Arabia’s leading manufacturer of building supplies, Rashed Al Rashed & Sons and the Finnish company Sormat Group have signed a letter of intent on the agency for Sormat’s fixing products in Saudi-Arabia.

Sormat and Rashed Al Rashed & Sons, an industrial conglomerate operating in Saudi-Arabia have agreed on the sales and marketing of Sormat’s products in Saudi-Arabia’s rapidly growing construction market. Rashed Al Rashed & Sons have operations in all the Middle Eastern states, and negotiations are underway on expanding cooperation to other countries, such as Sudan, Qatar, Kuwait and Lebanon.

“Expanding into Saudi-Arabia will considerably speed up our entry to the Middle Eastern market. Up till now the market in Saudi-Arabia has mainly depended on one manufacturer of fixings for the construction industry. Now we are introducing a competitive option in the premium products series. In the first years we are aiming at a modest 10 per cent market share, which would mean net sales of about 28 million US dollars in Saudi-Arabia alone. All in all, the Middle Eastern market represents a 50 million dollar opportunity,” says Mr Mika Kaukonen, Managing Director of the Sormat Group.

No signs of economic recession in Saudi-Arabia

The effects of the global economic recession are not visible on the Saudi-Arabian market: According to the IMF, despite inflation, the area’s economic development is expected to remain good. The growth prognosis for 2008 is six per cent.

The construction industry in Saudi-Arabia is being boosted by strong basic infrastructure development in the country. Many new schools and hospitals are being built, and in addition there are plans for building four mega-class new cities, which will have a combined population of about 4.5 million. The total value of investments in the new cities will amount to some 69 billion dollars.

“The market potential in Saudi-Arabia and the Middle Eastern market is bigger than in any other single market area of ours. The Saudi-Arabia contract will begin to make an impact on our net sales in autumn next year. This is an extremely important contract in a situation where construction in the European and Russian markets has slowed down dramatically,” says Kaukonen, who recently returned from Saudi-Arabia.

“The principal object of my trip was to find out whether the market is ready for the expertise and know-how concept we have built up. Rashed Al Rashed & Sons chose us as their partner expressly for our expert knowledge of safe building and high technology. In the near future, the Sormat Academy in Rusko, Southwest Finland, will be training a new group of students from the Middle Eastern countries,” Kaukonen concludes.

If business cooperation is started in a way satisfying to both parties, also structural arrangements may be made in future.

For further information, please contact: Managing Director Mika Kaukonen
tel. +358 (0)40 757 9812
e-mail: mika.kaukonen@sormat.fi

Sormat Group was founded in 1970. The group has European-wide operations manufacturing and marketing fixings, mainly for the needs of the construction industry. Sormat Group’s Finnish production plant and the Head Office are located in Rusko, Southwest Finland. The company has 100 employees in Rusko, and altogether the personnel numbers about 150. The Sormat Group’s net sales in 2007 were EUR 28 million, more than 80 per cent of this sum deriving from exports. www.sormat.fi

Rashed Al Rashed & Sons is one of Saudi-Arabia's biggest industrial enterprises and it has operations in all the Middle Eastern states. The company's head office is located in the eastern part of Saudi Arabia, in Al-Khobar. For further information, see: www.alrashed.com