Yanbu Cement Q1 profits expected to fall 17.8%

Cement profits have reduced overall in the last year.

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Yanbu Cement Company estimates that first quarter net profits will have fallen 17.8% against the same period last year, which is marginally higher than the fourth quarter of 2010.

Gross profits are likely to have fallen by just over 13%, the company has notified investors through Saudi stock exchange, from SAR 128 million down to SAR 111 million. Operating profit may decrease 14.8% to SAR 104 million from SAR 122 million, leaving an after-tax profit to stand at SAR 101 million, down from SAR 123 million.

The company has said a decline in annual sales, along with current annual maintenance for its fourth kiln, are the causes of the expectation of a decline in profits.

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Last year, Yanbu Cement was only one of two companies – along with Qassim Cement – to not sell more cement than in 2009, as the overall sales of the commodity rose 13% in the country, according to
Argaam, the business portal.

Returns from cement and clinker have narrowed for Saudi Arabia’s many listed suppliers in what has become an increasingly well-stocked market. Saudi companies can export though must meet certain criteria – including selling one bag locally at a steep discount for every one sold abroad – to do so, leading to more suppliers to look domestically.

However, a number of the biggest suppliers saw an increase in net profits last year against 2009. Yamamah Saudi Cement posted after tax gains that were up 17% against 2009. Saudi Cement, based in Dammam, said net profits rose 13% to SAR 659 million, up from SAR 582.4 million.

Yanbu Cement shares closed up 0.6% to SAR 45.9 yesterday, and have continued to recover from the two year low of SAR 39 a share on 2nd March.