RAK Cement posts losses for 2011 as sales dip

RAK Cement has compounded losses from last year.

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RAK Cement posted losses for the third quarter and first nine month periods this year, as declining revenue met with sustained sales costs.

The Ras Al Khaimah based supplier, one of the biggest in the UAE, said it made an after-tax loss of AED 11.4m, following sales of AED 41.8m which ducked under a sales cost of AED 50.6m to produce the negative returns. Its share of profit from Reem Ready Mix in Abu Dhabi, in which it holds a 20% stake, declined by two thirds against
the same period last year.

Over nine months, the company made a loss of AED 16.38m, extending the AED 146,600 loss of the previous year, as sales for the period declined 24.2% to AED 138m and other income declined against last year.

Earnings per share have evaporated, falling from -0.03 to 0.0003 in a year.

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A drought in new projects in the UAE following the economic downturn has hit the company and its rival suppliers hard this year.

Slashed prices and sustained costs have also squeezed margins. It has meant the company has had to compete regionally with sales overseas.

“An increase in export sales during the thirds quarter helped to compensate for the lower volumes in the local market,” M. R. Richardson, general manager, has stated to investors. “The selling prices were below the previous year and this has decreased the profitability.”

The results compare starkly with the profits posted by Saudi cement companies, which are currently seeing similar demand that Dubai suppliers experienced in the last decade on the back of multiple mega projects and investment into airports, ports, rail, affordable housing and economic cities.

RAK Cement’s total assets rose slightly to AED 802.9m, while cash flow from operating activities – a key measure of financial health – stood at AED 15.4m at the end of September, though uits accounts payable has increased sharply.

Shares closed down 1.35% to 73 fils yesterday.