Oman Cement Company’s (OCC) profit edged up to RO24.50m (US$63.6m) in 2010, from RO24.23m achieved in 2009, thanks to a RO7.34m government compensation for keeping cement prices low in the last two years. The Sultanate of Oman’s second largest cement producer said total revenue fell from RO71.92m to RO62.52m, while expenditure moved down to RO34.85m from RO44.56m during the period.
"Oman Cement net income came in at RO1.7m, down 77 per cent on a YoY basis and 62.5 per cent on a quarter-on-quarter basis and in line with our estimate of RO1.7m," said EFG Hermes in its research note.
Oman Cement said an amount of RO7.34m was received from the government last year towards reimbursement of losses incurred by the company in the years 2008 and 2009 on import of cement and clinker. The company’s shares moved up 0.97 per cent to close at 625 bais as on the Muscat Securities Market on strong demand for 777,810 shares.
The company last week said the Ministry of Commerce and Industry has asked it to socially contribute RO2.25m for villages environmentally affected by its operations. This is 50 per cent of the estimated amount of RO4.49m for villages affected by environmental status of the company. The remaining 50 per cent will be borne by the government.
"We believe higher than expected revenue growth indicates a recovery in sales volume. If OCC is able to capture lost market share with decrease in selling prices, it is a positive and negates the drop in selling prices. We believe profitability to be supported by the expansion of the new clinker capacity in the first quarter of 2011," added EFG Hermes.