Abu Dhabi Bildco net falls 41% on lower sales

Sales fell 37% in one year as competition in the sector grows.

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Abu Dhabi National Company for Building Materials saw net income fall 41% for 2010 on the back of sharply lower sales, as the competition among providers of basic supplies intensifies in the region.

After-tax gains fell to AED 28.7 million from AED 48.6 million the previous year. Sales declined from AED 859 million to AED 538.8 million, or 37%, to reduce the company’s total gross income to AED 73.4 million from AED 106.92 million. Its shares yesterday fell more than 9.5%.

The company, also known as Bildco, produces cut and bent steel, paving slab, tiles, concrete blocks and cement, among other items, and has stakes in separate businesses in aerated concrete, steel and reinforcing steel. Its financial results show that although its provision for “doubtful debts” reduced from AED 11.4 million to AED 5 million, its interest owed to banks increased.

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The price of many building materials had dropped for much of 2010, though December statistics from the Statistics Centre-Abu Dhabi, the independent research firm that tracks the industry, has found prices for some key items rise in price.

The average price of sulphate-resistant and Portland cement per tonne from the UAE in December rose 2.6% and 3.3% respectively against November, with concrete ready mix per cubic metre rising by as much as 12.2%. Steel bars between 10-25mm rose 14.6% from AED 2,314.4 per tonne to AED 2,652.2, still 9% down from the AED2,937.5 average price in May when renegotiated iron ore contracts from some of the world’s biggest mining firms sent the price of steel soaring.

Political unrest in Egypt over the last six weeks caused some producers to rein in their supply to the country and distribute elsewhere.

One Dubai based producer told Steel Business Briefing that it has cut its ex-works rebar prices from $700/t to $670/t of its Egypt-bound steel. Other offers into the region are currently said to be around $675-690/t fob from Turkish producers and $640-650/t fob from Byelorussia (Belarus).

Bildco shares fell 9.58% to close at AED 1.51 yesterday, having briefly rebounded at the start of February from a fall in share price since the start of 2010.