Moroccan cement producer Ciments du Maroc expects its net profit to grow in 2008 as dividends from an Egyptian affiliate and lower taxes offset higher energy and raw material costs, its chairman said.
Morocco’s cement market has grown at eight per cent a year since the start of the decade and Ciments du Maroc, a unit a of Italcementi , has struggled to keep output growing as fast as demand.
The company has been forced to buy in clinker to assure supply, denting profitability. Margins have shrunk further as the cost of energy grew.
External purchases of clinker, as well as rising costs of solid fuel, cut profits by MOD218m last year, Chairman Mohamed Chaibi told reporters and analysts in Casablanca on Tuesday.
"That 218 million risks worsening in 2008 but should stay stable in 2009 ... and largely disappear in 2010," he said.
"We can have a strong increase in sales, a worsening in variable costs and stagnation of fixed costs but we will still have an improvement in terms of net profit nonetheless."
Ciments du Maroc and its main competitors Lafarge Ciments and Holcim are investing heavily to meet surging demand for cement in Morocco due to ambitious transport infrastructure and housing projects and a boom in tourism developments.
The company has increased capacity at existing plants but part of the expansion was delayed after authorities blocked a planned extension of its Agadir factory.
Now it is building a new MOD3.1bn cement factory at Ait Baha in the south which can to produce 1.6Mt of clinker and 2.2Mt of cement. The plant’s first cement crushing unit will come on line in March 2009.
At its Marrakesh installation, an increase in crushing capacity and clinker production will become effective by the end of the first half of this year, the company said.
Ciments du Maroc’s net profit grew 17 per cent last year to MOD612.5m but operating profit climbed just 4.3 per cent to MOD900m.
Chaibi said he expected double-digit percentage growth in the Moroccan cement market again this year after a 12.6 percent increase in 2007.
The market could eventually reach over 20Mt, up from 12.8 million last year, before growth flattens out, as consumption of cement per inhabitant in Morocco is still below countries such as Turkey or Tunisia, company executives said.