Eastern Province pays final tranche of SIDF loan

Eastern Province is looking to capitalise on growing cement demand.

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Eastern Province Cement Company said it has paid the final tranche of a loan repayment to the Saudi Industrialisation Development Fund in advance of its maturity next January.

The Dammam supplier of clinker and cement said it has transferred SAR 25m used to help fund the expansion of its facilities and investment in more property and equipment.

The company is aiming to capitalise on the fast-rising demand for cement and other materials amid a construction boom across the kingdom. High government spending in the last year that include new city developments, financial districts, towers, housing, airports and educational institutions have met with increasing private development.

Eastern Province saw net profits for the first six months fall 6% tp SAR 184m against the same period in 2010, a result analysts say was likely hampered by its location as well as old operating systems, which is why the company is upgrading. Sales for the second quarter fell 7.2% year-on-year to SAR 214.9m.

“The decline in sales revenue ... is not surprising as the performance of the company continues to be restricted by capacity limitations and operation of old lines, which is preventing it to benefit from improvement in cement demand in Saudi Arabia,” wrote Global Investment House in a second-quarter report.

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The Saudi Industrialisation Development Fund is a government investment vehicle formed by Royal decree in 2003 that is helping to develop the country’s industrial sector through medium- to long-term loans. These loans have focused mainly on funding the construction of factories and the refurbishment of existing structures.

The fund also provides financial advice, marketing and technology to industrial companies and projects, as well as a scheme to develop small- and medium-sized companies

Saudi Arabia has in the last 18 months seen a swift growth in the sector, as a complement to its construction activity. Projects such as the Ma’aden-Alcoa joint venture to build the first aluminium smelter – at a cost of around $1bn – is just one of the many major projects within a wider industrial revolution.

Eastern Province Cement trades at SAR 47 per share, according to yesterday’s closing price in Riyadh.