Southern Province revenue down 25% in 1Q22

Saudi Arabia-based Southern Province Cement Co has posted a revenue of SAR330m (US$88m) for the first three months of 2022. This represents a 25 per cent drop when compared with the 1Q21. Cement sales volumes were down 23.7 per cent YoY to 1.6Mt.

Gross profit declined 42.3 per cent YoY while operating profit decreased 47 per cent YoY in the 1Q22. Gross margins were down to 32.2 per cent in the 3M22 from 41.9 per cent in the 3M21.

"For Q1 2022, cement volume of SPCC fell by 23.7 per cent YoY, underperforming the industry, which on an average fell by 10.1 per cent, and the performance of the Southern region, which registered a fall of 20.6 per cent. However, cement prices were relatively stable and better than the companies operating in other regions," financial services provider Al Rajhi Capital stated in the review.

"Going forward, we expect construction activity to remain weak; along with this, with a clinker inventory of 34.7Mt, in April 2022, which is around seven months of production (LTM), we expect the average realisation to remain under pressure,” said an analyst at Al Rajhi.

"However, there could be a slight recovery in the volume post 1H22, as we expect marginal recovery in demand backed by an improvement in the execution of mega and giga projects. However, this recovery is likely to be limited, resulting in cement sales volume coming lower in 2022, compared to 2021," he added.