Cement firms set to spur industry sector growth


02/07/2012 16:01 AST  Oman Daily Observer

With the enhanced level of government spending along with key project implementation, the industry sector is expected to catch further momentum in the coming quarters.

The total earnings of the sector firms in the Muscat Securities Market for the first quarter of the current fiscal stood at RO 19.922 million showing an increase of 41.6 per cent on quarter to quarter basis.

At the same time the total revenue increased marginally by 0.3 per cent on year on year basis driven mainly by lower revenue from the construction and commodity majors. The same increased by 13.1 per cent on a sequential basis. In the same quarter cement and commodity sector earnings saw major revival.

“The RO 1.634 billion infrastructure spending by the government in 2012 spells good news for the cement and commodity firms. We anticipate the earnings of this sector majors to remain in higher double digits in the coming quarters”, says a research report of Gulf Baader Capital Market (GBCM).

According to industry estimates, the total cost of the ongoing projects in Oman is estimated to be around RO 33.5 billion. In its Eighth Five-year Plan, the government allocation towards project investments is around RO 13.693 billion as against the earlier estimates of RO 12.056 million.

The total approbations allocated for the first and the second years of the plan (2011 and 2012) and the projects continuing from the Seventh Plan will amount to RO 8.555 billion, of which an amount of RO 1.634 billion will be for the cost of the new projects scheduled for this year.

The total cement demand in the country is expected to increase by 7 per cent year on year and touch six million tonnes in 2012.

Till recently, the Omani cement manufacturers were victims of cheap inflow of cement from UAE due to slump in the real estate sector in the region.

With the rising operational costs, the UAE players are no longer in a situation to offer the cement at lower prices, which gives strong case of market share capitalisation by local players during the current year.

“The government’s continuing thrust in the construction and infrastructure sector has propelled a rise in the cement consumption in the country which is a positive sign for the sector,” says the report.

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