Eastern Province Cement Company announced its 2Q-2010 results. Net profits inched up by 1.2%YoY in 2Q-2010 to SR104.3mn. The company managed to increase its sales volumes by 29.6%YoY to 1.08Mt in 2Q-2010. The increase was helped by local deliveries of 268,000t of clinker in 2Q-2010 which were non-existent in the same period last year.
However, the increase in sales revenue by 12.1%YoY to SR231.6m in 2Q-2010 came at the expense of declining margins. Gross margins declined to 45.9% in 2Q-2010 compared to 55.9% in the corresponding period last year.
Eastern Province Cement has been a traditional exporter of cement with overseas dispatches accounting for 18% of the total volume sales in 2008. However, the selective ban on exports has forced the company to sell in the domestic market increasing freight and transportation costs.
On a cumulative basis net profits decreased by 1.8%YoY to SR196.5m in 1H10 despite the increase in sales by 10.5%YoY to SR441.8m as the average realised prices of cement fell by 9.9%YoY to SR221.2 per ton in 1H-2010. Consequently gross margins declined to 48.1% in 1H-2010 compared to 55.6% in the corresponding period last year.