Qassim Cement reported a 1Q11 net profit of SAR147.2m (US$39m), 6.1% above estimates of SAR138.7m by Global Investment House (GIH) and 1.3% above 1Q10 net profit of SAR145.3m. Net profit margins remained fairly stable at 53.4% in 1Q11 compared to 53.3% in 1Q10.
Sales revenue increased slightly 1% YoY to SAR275.4m. Sales volumes were down 6.1% to 1.13Mt in 1Q11 but the lower volumes were more than offset by increases in realisation prices by 7.6% to SAR243.3/t. Consequently, gross margins improved to 59.1% compared to 57.5% in 1Q10.
Increases in domestic demand of 7.9% YoY in 1Q11 helped mitigate the impact of intensified competition in the Central region which subdued company’s 2010 performance. Madina and Riyad cement, which are both present in the Central region, increased their combined market share of local dispatches to 11.5% in the first five months of 2011 from 10.1% in the same period last year. However, GIH expect the market share of these two companies to stabilise at current levels due to their high utilisation rates thus giving Qassim Cement breathing space.
GIH have increased its sales revenue forecast for Qassim by 6.2% to SAR1017m for 2011 in light of 1Q11 results. It has also increased its 2011 net profit forecast by 9.2% on account of improving margins.