RAK Co. for White Cement see sales and costs rise

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Ras Al Khaimah Company for White Cement & Construction Materials saw a 43% fall in net profits for the first half of 2010 compared to the same period last year, as the increased cost of sales ate away at gross takings.

The UAE firm, which produces white cement used in tiles and other decorative elements as well as calcium silicate bricks, saw after-tax numbers fall from AED50.15 million last year to AED28.3 million, in results yet to be audited.

However, the company’s finance officer declared high demand for its products and is expanding one of its three plants to meet national and international demand.

Its net profits for the second quarter were almost a sixth of those in the second quarter of the previous, year, down to AED6.87 million from AED36.9 million. Net operating profit was up 8% to AED49.6 million, although the company pointed out that one kiln was out of production until April.

Ras Al Khaimah Company for White Cement & Construction Material also produces hydrated lime through its subsidiary Ras Al Khaimah Lime Company, also known as Noora, chiefly used for its nearby lime brick factory that produces the calcium silicate bricks. It sells throughout the Gulf countries as well as to India and East Africa.

Sales increased 14% from AED160 million from AED144.2 million for the first half of the year, although the cost of sales surged from AED95.2 million to AED110.4 million. The UAE saw the biggest rise in business, selling more than AED62 million of product for the last six months against AED51.7 million last year.

Sales and cost of sales for the last three months saw rises of similar proportion compared to the second quarter of last year.

The dip in net profits was also the result in an increase in administrative costs, a drop in other income and a fall in profits from its available-for-sales securities. Net cash from operating activities took the biggest hit at about a tenth of the previous year – AED17.2 million down to AED1.7 million – resulting in a near-AED3 million decrease in cash and cash equivalents for the period.

The finance officer told CW that, compared to grey cement, the market for white cement was thriving. “It is a different commodity, for use in villas, tiles, precast. There is a lot in the market still going on.”

He adds that the company has a cement block factory now a year old that is running at full capacity. “During the last year we’ve spent AED300 million, and new lines will hopefully start up at the beginning of 2011.

“There are three plants running at full production,” he said. “For the cement block factory we are upgrading, adding new production lines, as right now the supply is insufficient for the demand.“

Thirty per cent of the cement blocks are sold locally, he said, adding that Saudi Arabia is its biggest market.