Raysut 1H11 pretax profit declines

Raysut 1H11 pretax profit declines
Published: 25 July 2011

Oman’s largest cement producer Raysut Cement posted a pre-tax profit of OMR7.59m (US$19.7m) for the six months ended June 30, 2011, compared with earnings of OMR13.65m during the corresponding period of last year – a 44 per cent decline blamed on intense price competition from UAE suppliers and volatility in the export market. (However, the pre-tax profit of last year included the price subsidy of OMR1.59m.)

Total sales by the company declined 17 per cent to OMR29.97m during the period under review, from OMR36m during the corresponding period last year.

“The decline in profit is attributable mainly to severe competitions faced by the Company both in the domestic and the export markets impacting both volume and the price, which has started from the previous year,” Mohammed bin Alawi Ali Muqaibal, Chairman of the Board of Directors, stated in the Chairman’s Report issued here yesterday.

The Group earned revenues of OMR43.45m and pre-tax profit of OMR8.89m for the first half of this year. Wholly owned subsidiary Pioneer Cement earned a profit of OMR1.20m in spite of the severe competition faced by the company in the UAE market.

While cement demand in the construction sector is projected to rise, competition from UAE suppliers is expected to continue to dampen prospects for the cement industry in Oman for some more time, the Chairman said, adding however that the situation is likely to improve in the coming years.

“The company however concentrated on the export front by enlarging the current market base, as well as by finding new markets. Also in sync with its strategy Pioneer Cement, a 100 per cent subsidiary of the company, has started supplying cement in the north Oman market. The company’s initiative to further explore the potentials in the export market, alongside meeting the growing demands in the domestic front would place the company in a distinctly advantageous situation in the coming months and years,” Mohammed bin Alawi stated.

Total output by the group aggregated 1.71Mt of clinker and 1.6Mt of cement during the first half of this year. Of this volume, the Salalah plant produced 1.09Mtof clinker, against 1.07Mt produced in the same period of last year, an increase of two per cent.

Cement production at the Salalah facility declined five per cent to 997,286t this year, against 1.05Mt during the corresponding period of last year. Production at Pioneer Cement amounted to 618,675t of cement and 621,959t of clinker during the first half of this year.

Total sales by the company reached 1.7Mt of cement and 177,699t of clinker this year, against 1.07Mt of cement and 254653t of clinker in the corresponding period of last year, registering an increase of about one per cent in cement sales and a decrease of five per cent in combined cement and clinker sales.