Saudi Cement Co, Saudi Arabia’s largest cement maker by market value, on Tuesday posted a 9.4 percent fall in second-quarter earnings percent due to a government ban on exports and a rise in costs.
Saudi Cement made a net profit of 171.6 million riyals ($45.8 million) in the three months to June 30, down from 189.5 million riyals in the year-earlier period, it said in a statement on the bourse website.
“The decline in the company’s profi… is due to a decline in revenue from export sales accompanied by a rise in input costs,” it said.
The government slapped in early June a ban on exports of cement to alleviate supply bottlnecks amid a surge in demand both domestically and from neighbouring countries.
Saudi Cement was the only of the three largest listed cement makers to post a decline in second-quarter earnings.
Second-quarter profit of Southern Cement, the second-largest cement firm by market value, rose 19.5 percent and that of Yamamah Cement’s, the third-largest cement firm by market value and second-largest by production, was up 12.5 percent.
Saudi Cement earnings came below analysts’ forecasts which ranged from 180 million riyals to 199.3 million riyals in a survey last month.
Operating profit for the six months to June 30 reached 332.6 million riyals, down 4.6 percent from a year earlier, said Saudi Cement, which is also the industry’s largest by output volume.
It produced 5.3 million tonnes in 2007, according to its annual report. About 22 percent of the firm’s production was exported in 2007.
Demand for cement is surging in Saudi Arabia, where the economy is benefiting from a 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.
Saudi cement firms production capacity is expected to rise to 43.6 million tonnes by end-2008 and to 49 million tonnes by end-2009 from 31 million tonnes in 2007, according to a study by local BMG Financial Advisors that was published last month.
Local consumption grew by 8.4 per cent in 2007 to 26.8 million tonnes, BMG said.
“The 3.5 million tonnes of exports in 2007 which accounted for 12 percent of the total cement sales will be partially offset by the local demand growth story and exports to Bahrain, which is exempt from the export ban,” it said.
Net profits of Saudi cement firms is expected to rise by at least 20 percent in 2008, Faisal Hasan, head of research at Kuwait-based Global Investment House said in April.
Shares of Saudi Cement have fallen 14 percent this year, a better performance compared to the industry’s index which is down 23 percent, according to the Saudi bourse’s data. (
Follow us on
