By Jason Benham
Union Cement posts 60.2% drop in net profit in the second quarter on raw material and fuel costs.
Union Cement Coposted a 60.2 percent drop in net profit in the second quarter on high raw material and fuel costs, as well as a sharp decline in income from investments in shares.
Net profit in the three months ended June 30 fell to 38.22 million dirhams ($10.41 million) from 96.06 million dirhams in the same period last year, below two analysts' forecasts in a survey last month.
Earnings per share for the second quarter fell to 0.06 dirhams from 0.15 dirhams, the UAE's third-largest producer by market value said in a statement on the Abu Dhabi bourse website.
Income from investments in shares plunged 95.1 percent to 2.01 million dirhams, the Ras al-Khaimah-based firm said.
"The decrease in net profit is due to the high cost of raw materials, heavy fuel oil and the increase in cost of power generation due to the shortage of supply ... and the shortage of gas supply," the statement said.
Union Cement used diesel and leased power generators to compensate for the power supply shortage, it said. Other income dropped 79.9 percent to 610,000 dirhams, it added, without giving details.
Financing costs soared to 1.22 million dirhams from 48,000 dirhams.
Last month, the cement firm said it was considering using coal to fire one of its kilns instead of natural gas or heavy fuel.
Cementmakers in the United Arab Emirates are turning to imported coal as gas is scarce and a petrodollar-fuelled building boom shows no signs of letting up. (Reuters)