Arabian Cement Company (ACC) posted a net profit SAR9.9m (US$2.6m) compared to Global Investment House’s (GIH) estimate of SAR70.8m in 4Q10. The discrepancy relates to losses from associates of SAR25.3m which have been recognised in the 4Q10. In addition, the cost of sales jumped substantially to SAR140.9m, which translates to 76.5% of sales from SAR91.8m, 51.2% of sales revenue in 4Q09. However, on a YoY basis the company came into profits after it posted a loss of SAR87.2mn in 4Q09. The net profit in 4Q09 was severely dented by write-downs of SAR97.0mn relating to property, plant and equipment and a SAR50.0mn loss from associates.
The company witnessed a marginal increase in sales of 1.0%YoY in 2010 to SAR744.6m despite an increase in total cement dispatches by 7.6%YoY to 3.2Mt. The increase in volume sold was accompanied by decrease in realisation prices by 6.1%YoY to SAR232.6/t.
Meanwhile, net profits increased by 48.5%YoY to SAR255.4m in 2010 largely due to lower profits from associates and reversals in provisions. However the gross margins declined substantially to 42.8% in 2010 from 52.9% in 2009 as cost of sales per ton increased by 14.1% to SAR133/t.
GIH has reduced its sales revenue forecast for ACC by 3.3% to SAR801m for 2011 due to the delay in commissioning of the Jordan cement plant. It has increased its 2011 estimate of cost of sales by 7.2% in light of the recent results. GIH have also decreased its net profit estimate by 16.5%. Going forward, it expects the theme of ACC to revolve around its Jordan operations.