Sharjah C&ID, Arkan, RAK Co a mixed bag for cement

Costs of cement production have increased for suppliers

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Sharjah Cement & Industrial Development is the latest company to experience the relative drought in cement demand by seeing more than AED100 million wiped off its sales figures in 12 months.

The company saw a sales turnover of AED173 million for the first quarter of this year, a sharp decline from sales of AED297.5 million for the first quarter in 2009.

The fall reflects the three-fold pressures of a decrease in demand, a decrease in price, and an increase in the costs of production. Indeed, the cost of sales as a percentage of the sales figures themselves increased from 74% to 86%.

Overall the company halved its net profits over the last year, down to AED23.89 million from AED51.37 million, though shareholders equity improved, up to AED1,393 million from a Q1 2009 level of AED1,337 million. Cash and cash equivalents holdings decreased by more than 75% to AED32.2 million from AED126.2 million.

Arkan Materials also saw sales slump by a similar figure. First quarter revenues stood at AED66.5 million down from AED166 million for the first three months of 2009, with net profits declining from AED91 million down to AED19 million.

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It is the latest set of meager results for cement producers that have to spend more to produce less. Last week, Muscat-based Oman Cement Company and rival Raysut Cement also saw steep sales declines, the latter by almost a third.

Better news came from more specialized Ras Al Khaimah Co. for White Cement & Construction Materials. The Abu Dhabi-listed company – whose products include white cement, used in precast facade finishes, and calcium silicate bricks – saw sales leap 20% to AED79.6 million compared to AED66.5 million.

Net profits rose 63.5% (AED21.5 million up from AED13.16 million).

Last week, Hettish Kumar, senior financial analyst at Global Investment House in Kuwait, pointed out to CW that a slowing of projects in the UAE would see more companies look to export products to neighbours such as Oman.

“The UAE is exporting what it can, although prices between the two countries are very similar,” he said.

He was broadly more positive on the near futures of the Omani firms, and highlighted for particular interest the ongoing talks between Raysut Cement and UAE takeover target Star Cement.