Oman Cement Company reported net profit of OMR4.2m (US$10.9m) in 1Q11 compared to OMR7.1m previously. Profits were down due to depressed selling prices as well as losses reported by the company on their investment in equity markets.
Cement selling prices were lower by 16.4% to OMR26.2/t during the quarter compared to OMR31.3/ton in 1Q10. This double-digit decline in cement prices resulted in gross margins falling to 36.9% in 1Q11 as against 45.1% in 1Q10. Sales volume were down 1.6% to 0.49Mt because of an inflow of cheaper cement from neighbouring countries.
The incorporation of the 2011 results together with a quarter delay to the commissioning of a third clinker line reduces the company’s net profit estimates for 2011. The company’s share price has seen a 5.3 per cent increase in the last month. Global Investment House forecasts a 5-10% decline in the share price because of a lower than expected profit.