Losses hang over Union Cement meeting tomorrow

A shrunken construction market has slashed cement firm profits.

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Union Cement Company is to hold its board of directors meeting tomorrow to finalise a periodic financial statement and discuss the company’s direction after seeing some of the heaviest losses in the industry.

The Ras Al Khaimah-based manufacturer, which produces ordinary Portland as well as high sulphur-resistant and oil well cement, has seen gross profits slashed by more than 91%, down to AED10.3 million from the AED122.4 million from the first six months of last year.

Revenues declined by almost a quarter to AED313.8 million from AED409 million, and with the cost of sales increasing its net loss for the period stood at AED9.8 million – against a AED90.1 million net profit last year.

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Its cash flow from operating activities, which factors in depreciation, interest income, and the readjusted value of its UAE-based share portfolio and other investments in line with fair value – marked to current market price – accounting, was AED68 million, down 53%

Second quarter results saw falls of similar proportions. Revenues fell a relatively marginal AED23.2 million to AED173.6 million though gross profit was almost a tenth of that of last year, down to AED8 million from AED71.9 million in 2009. The net loss for the April-to-June period was AED2.1 million, down from a profit of AED50.8 million.

“The present global financial crisis and real estate mortgage has some impact on the company business as it leads to considerable reduction in the selling price,” chairman Sh. Saqr K. H. Al Qasimi said in a released statement.

He added that the company is not intending to expand its plant or production capacity based on sluggish demand for the material in the local market.

Hettish Kumar, senior financial analyst at Kuwait-based Global investment House, told CW earlier in the year that UAE and Oman firms had resorted to selling into each other’s markets in an attempt to retain profits.