Saudi Cement Co, Saudi Arabia’s second-biggest cement producer by market value, said-first quarter profit rose 19 per cent as production efficiency increased with additional capacity.
Net income climbed to SAR210.8m (US$56m), or SAR1.38 riyals a share, from SAR176.6m, or 1.15 riyals, in the year-earlier period, the Dammam-based company announced in a statement to the Saudi bourse website today.
Saudi Cement results exceeded Global Investment House’s (GIH) estimate by 11.4%. The house notes that the results are demonstrate a strong performance considering the fact that the company’s cement dispatches have stayed more or less flat at 1.81Mt on a YoY basis in the 1Q11.
The company attributed the improvement in profitability to increased production efficiency of new production lines in addition to decrease in depreciation expense.
The company introduced new production lines in April 2009 which has resulted in significant cost savings for the company. Saudi Cement cost of sales per ton came down to SAR112.3/t in 2010 compared to SAR120/t in 2009.
GIH notes that Saudi Cement’s outlook in the short-term will revolve around its ability to realise further efficiency savings due to the new production lines. In the longer-term, lifting of export ban and further improvement in local demand will be the key growth factors for the company.