Saudi Cement net profit down 37%

Saudi Cement has registered a 37 per cent drop in its net profit for the first quarter of SAR165m (US$44m) versus SAR265m (US$70.5m) attributed to lower volumes and selling prices amid slugglish demand.

Despite weaker volumes, helped by locational advantage, the company's average realised price marginally declined by three per cent YoY and was down two per cent QoQ, as compared to deep discounts offered by other cement companies, according to Al Rajhi Capital report.

Saudi Cement's gross profit declined 35 per cent YoY to SAR191m, impacted by the decline in the top-line as well as the increase in cost per tonne by four per cent YoY.

However, Al Rajhi pointed out that the company holds the highest level of inventory in the sector (5.1Mt), which could give it an advantage over its peers in the coming quarters after any potential removal of energy subsidies.

"However, the advantages are unlikely to sustain due to increasing competition amid weak demand outlook, which may lead the company to offer discount in coming few months. We continue with our neutral rating on the stock and an unchanged target price of SR55 per share," it added. (Source: Mist News)