Oman-based cement producer Raysut Cement Company reported net profit of OMR5m (US$13m) in 1Q11 compared to OMR6.8m previously. The fall in profit was attributed to depressed selling prices along with losses reported by the company on their investments. Global Investment House’s (GIH) initial estimates stood correct as it expected that most of the financials would get diluted post-consolidation of Pioneer Cement.
The handsome margins enjoyed by the company earlier dropped to 43% in 1Q11 compared to 59.8% in 1Q10. Production and sales were down by 2.2% and 11.1% to 0.8Mt and 0.85Mt respectively, owing to competitions from the UAE suppliers.
The Pioneer acquisition was completely debt funded which raised the debt-to-asset ratio to 36.7% in 1Q11 compared to 2.0% in 1Q10.