Kiln nightmare sees CMI&C 2010 profits fall 110%

Ben Roberts , July 26th, 2010

Construction Materials Industries & Contracting suffered a nightmare first half of the year for its operations and has seen its net profits fall more than 110%.

The Muscat-based firm, which produces calcium and silicate bricks, blocks, paving and cladding, ran into production delays and machinery fuel issues, it reported in its half-year financial statement.

The company posted an OR34,474 loss, compared with a net profits of OR337,935 for the same six months last year.

The trouble arose from its vital lime kilns. Firstly, its 100-tonne lime kiln stopped production for 75 days for repairs. Then its 200-tonne replacement, designed to run on natural gas, came to a halt due to the “unavailability” of that fuel.

A switch to liquefied natural gas also suffered supply issues, meaning the machine could run on only 60% of its normal production levels, prompting further delays to which the company attributes the sales figures for the period, which decreased by 4.08%. “Unusual rain” also hindered progress.

“Management is still working hard to increase the production capacity of all plants,” the company said in a statement.

“It has also approached government agencies to ensure un interrupted supply of gas fuel for the new 200-metric tonne lime kiln installed at Sohar Plant, in order to utilize the full production capacity. This will help us to increase the ability to compete especially in the foreign markets, which will have a positive impact in the long run.”

Cost of sales also increased in comparison to 2009, from OR1,076,050 to OR1,342,032.

The company is also seeking licenses for a lime stone quarry at Wadi Al Jizzi in Wilayat Sohar and for a silica quarry at Saleel area, Wilayat Quriyat.

The company has greatly underperformed the MSM30 index, declining from OR0.1 at the start of March to close at 0.067 at the end of last week. Yesterday the stock closed at OR0.68.