Yanbu Cement Company announced a YoY decline in net profit of 18.8 per cent in the first quarter of 2010 to SAR123.2m (US$32.85m).
A recent report by Global Investment House (GIH) showed the Saudi-based producer reported a decline is sales revenue of 13.7 per cent YoY to SAR239.5m in 1Q10 due to the expected fall in the average realisation price for cement to an estimated SAR234.6/t compared to SAR287.5/t in 1Q09.
New capacity additions, along with the government’s selective export ban, continued to impact gross margins which were down to to 53.3 per cent in 1Q10 compared to 57.6 in the corresponding period last year.
In addition, competition has intensified in the western region as other producers are seeking to extend their sales to the region in the aftermath of the export ban, GIH reported.
GIH expect that the volumes sold by Yanbu Cement reached around 1Mt in the quarter, based on the dispatch figures for the first two months of 2010 which showed a rising trend. However, the increase has come at the cost of lower margins and realisation prices.
On a QoQ basis, sales increased by 25.9 per cent due to increases in volumes sold by an expected 29.7 per cent in 1Q10, reflecting strong domestic demand growth and seasonal effect, GIH noted.