Saudi Cement sees industry's lowest profit growth

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PROFIT GROWTH: Saudi Cement posted net income of $46.2 million in the first quarter. (Getty Images)

Saudi Cement Company, Saudi Arabia's largest cement maker, said first-quarter income rose 2.7% on higher sales, though the growth in profit is one of the industry's lowest.

Saudi Cement made a net profit of 173.3 million riyals ($46.2 million), or 1.7 riyals per share, in the three months to March 31, up from 169 million riyals, or 1.66 riyals per share, in the year-earlier period, it said in a statement on the Saudi bourse website.

Saudi Cement is both the industry's largest by market value and by production which stood at 5.3 million tonnes in 2007, according to its annual report. About 22% of the firm's production was exported in 2007.

In contrast, Yamamah Cement, the third-largest cement firm by market value and second-largest by production, made a first-quarter net profit of 197.5 million riyals, up 14% from the year-earlier period.

Saudi Cement's operating profit rose 1.5% to 167.1 million riyals.

Its annual net profit growth in the first-quarter shows a slowdown compared to the fourth-quarter of 2007 when it was at 9%.

Demand for cement is surging in Saudi Arabia, where the economy is benefiting from an exponential surge in oil prices during the last six years.

Companies in Saudi Arabia, the world's largest oil exporter, are developing or have announced projects in oil, gas and industries worth more than $460 billion, according to data from London-based Meed magazine.

Net profits of Saudi cement firms is expected to rise by at least 20% in 2008, Faisal Hasan, head of research at Kuwait-based Global Investment House said earlier this month.

Cement capacity is expected to double to 60 million tonnes within the next three years as existing companies expand and new producers enter the market, he added.

Global said in November the Saudi cement sector would benefit in the medium term because of sustained revenue growth.

Shares of Saudi Cement have fallen 6.1% this year, a better performance compared to the industry's index which is down 9.7%, according to data from newswire Reuters. (Reuters)

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