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RELATED ARTICLES: Fuel shortage delays Yanbu Cement lines | Jacobs wins Marafiq contract at $1bn Yanbu IWP | Cement stock stars
Yanbu Cement Company said it has signed a Memorandum of Understanding to develop a fifth production line at its main plant despite suffering major shortages of oil and natural gas to power its existing output.
Earlier this week, CW reported how the Yanbu-based manufacturer has had to delay the opening of new production lines which would double the company’s annual capacity from 3.6m metric tonnes to 7m metric tonnes.
It was the second this year that the company has delayed its scheduled production due to fuel shortage, after reporting in April that three new lines with a combined capacity of 4,000 tonnes were stopped due to a lack of fuel.
Yesterday, the company revealed in a note on the stock exchange that the fifth line is due to come on line in January 2012, avoiding changes to the company’s financial results and forecasts for this year.
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Yanbu Cement is aiming to upgrade its ageing infrastructure that last year caused string of fires that required hasty assurances from the company as to the effect on production. The cement industry in Saudi Arabia has seen a sharp increase in demand in the last 18 months following unprecedented construction plans across the country across ports, airports, housing, financial districts, towers and new economic cities.
The company saw net profits increase 32% to SAR 150m in the second quarter, and reported total net for the first half of the year of SAR 236.6m.
The analyst team at TAIB Securities revised upwards its target price on the company’s stock – currently trading at SAR 58.5 – to SAR 53 on 12 September. NCB Capital analyst Farouk Miah remained ‘underweight’ in a revised recommendation yesterday.
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