Saudi Arabia: cement sales down 7%

Saudi Arabia: cement sales down 7%
14 November 2016

A recent report from Al Rajhi Capital Research stated that total cement sales in Saudi Arabia fell 6.8 per cent YoY to 47Mt in the first 10 months of 2016, from 50.2Mt in the same period last year. Clinker production also saw a decline, falling 1.7 per cent YoY. Total cement sector revenues declines 19 per cent YoY as a result of lower sales volume (which was down 10.5 per cent YoY) and a fall in the average realised price/t for most companies. Aggregate net income saw a significant decline of 22 per cent YoY to SAR853m (US$227.4m).

Saudi Arabian cement inventories have continued to climb, with a 16.4 per cent YoY growth propelled by a fall in sales volumes and record production levels. Total inventory reached 28.2Mt, representing 49 per cent of the last 12 months’ sales.

According to data released by Yamama Cement, total cement dispatches in the kingdom fell 15 per cent YoY but grew 29 per cent MoM to 4.32Mt in October.

Tabuk Cement and Qassim Cement were the only producers to report positive YoY growth in sales volumes, registering an increase of seven and three per cent, respectively. Northern Cement and Najran Cement experienced the greatest declines, with a YoY decline of 49 and 45 per cent, respectively.

Speaking on the future outlook of the Saudi Arabian cement industry, Al Rajhi Capital Research said: "Going forward, we believe that construction activities will remain weak for the foreseeable future as the government spending adjusts to low oil prices through spending cuts and prioritisation of projects… In November and December, we expect cement demand to remain modest, and achieving a positive YoY growth could be a challenge for companies. However, we expect clinker production to increase given the probability of further reduction of subsidies in the short-term.”

Published under Cement News