Raysut Cement Co has reported a 21% decline in net profit before tax for the nine months ended 30 September, 2010. Earnings fell to OMR19.03m, compared with OMR24.18m the previous year. Sales revenues fell by 30% to OMR49.88m from OMR71.30m during the equivalent period last year. In terms of volumes, 1.557Mt of cement and 0.319Mt of clinker was sold.
Chairman of the board of directors, Mohammed bin Alawi Ali Muqaibal attributed the decline partly to severe competition and demand recession. The decline in profit may be attributable mainly to the severe competition from the external markets coupled with demand recession in the export markets put pressure both on sales volume and pricing, and also to the fall in prices of marketable securities compared with that in the last year. The prices of marketable securities, however, are recovering its ground since the beginning of the year. Cost reduction initiatives and drastic reduction in import have significant favourable impact on holding the profit at a level that otherwise would not have been possible to attain," he said.
Despite the lower earnings, clinker production at the company was marginally higher at 1.613Mt (1.571Mt in 2009) during the period. Cement output surged by 20% to 1.538Mt, offsetting any requirements for imports, which impacted on sales. "The inflow of cement from UAE coupled with price competition in the northern market in Oman, as well as the demand recession and competition in the export segment, have impacted the volume of sales and revenue during the period," Mohammed bin Alawi stated.
Source: Zawya, UAE