Yamama Cement posted a net profit of SAR179.8m (US$48m) in 1Q11 which was 7.3% above Global Investment House’s (GIH) forecast of SAR167.7m and 9.0% above 1Q10 net profit of SAR165.2m. The profitability was propped up by decline in cost of sales per ton by 6.3% to SAR102.3/t. Yamama Cement has a cost advantage relative to the sector due to its integrated production plant and captive power supply which further became prominent during the quarter.
Meanwhile gross margins increased to 55.8% in 1Q11 from 51.4% in 1Q10 due to operational cost efficiency and higher realisation prices. Yamama Cement has the ability to charge premium prices due to its proximity to demand centers in the central region.
Sales increased marginally by 0.7%YoY to SAR351.5m in 1Q11. The sales were supported by increase in realisation prices by 2.5%YoY to SAR231.2/t. The increase in realisation prices came at the back of fall in volumes sold by 1.7%YoY to 1.52Mt.
Yamama is considering the replacement of five old production lines with a new one, according to an announcement posted on the Tadawul website.