3Q10 results support Underweight call

Southern Cement announced worse than expected 3Q10 results on 16 October 2010. Net income fell 15% and came in 17% below our estimate. We await the full financials before updating our model, but believe the 3Q10 numbers support our Underweight call on Southern Cement.

• Gross profit –3Q10 came in at SR134mn, declining 14% YoY and 14% below NCBC estimate for 3Q10 at SR155mn. 3Q10 was a decrease of 31% QoQ.

• Operating profit - 3Q10 came in at SR124mn, declining 15% YoY and 15% below NCBC estimate for 3Q10 at SR145mn. 3Q10 was a decrease of 32% QoQ.

• Net profit –3Q10 came in at SR119mn, falling 15% YoY and 17% below NCBC estimate for 3Q10 at SR143mn. 3Q10 was a decrease of 36% QoQ.

• EPS – 3Q10 came in at SR0.85, declining 15% YoY and 17% below NCBC estimate for 3Q10 at SR1.02. 3Q10 was a decline of 36% QoQ.


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