Saudi Cement net profit rises 54.4% in Q1

23/04/2012 16:15 AST

Saudi Cement witnessed an extraordinary 54.4 percent increase in 1Q12 net profit to SR325.5 million as compared to the same period a year ago. The profit rose by another commanding 53.3 percent on a QoQ basis. Profits increase can be addressed to increased cement production by SCC and higher demand in the Kingdom. Construction activity is witnessing a growing era where government spending is reaching all time high.

Cement dispatches for Saudi Cement in 1Q12 increased by 38.5 percent QoQ to 2.4 million tons. Remarkable cement dispatches lead to highest quarterly sales revenue in the company’s history which increased by 44.4 percent QoQ to SR639.3 million. Sales revenue was also supported by an increase in average realization prices by 5.4 percent QoQ to SR258.2 per ton.

Saudi Cement is benefiting from the increasing local demand which is expected to touch 52mtpa in 2012 and utilizing its economies of scale. However, gross margins of the company decreased on a quarterly and yearly basis to reach 55.2 percent as cost increased by 60 percent on yearly basis due to the increasing production.

SCC witnessed a downscaling in its balance sheet as the company pays out its debt and dividends. Assets decreased 14.7 percent and equity is down by 18.6 percent. SCC’s debt/equity ratio is currently at 0.4x in 1Q12 and is expected to decrease to 0.2x in 2012. The company has a modest current and quick ratio of 0.7x and 0.4x respectively.

Sales forecast for 2012 sales is raised by 39.1 percent and per ton cost is expected to be cut by 11.1 percent.

Saudi Gazette