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RELATED ARTICLES: Oman's Cement & Gypsum Products sees 2010 declines | Oman steps up efforts to cut water wastage | Aluminium prices on downward trend
National Aluminium Products saw third quarter net profits fall 18% and sales dip 2% as the company looks to growing economic momentum and infrastructure projects to fund production.
The Rusayl, Oman-based manufacturer of extruded aluminium products saw after tax gains reach OR471,000, down from OR580,000 for the same period last year, with sales just over OR5.32 million. Net profits for the nine months reached OR1.6 million, down 15.4% from the OR1.9 million in 2009, with sales slipping just over 1%.
“The company has delivered a resilient growth performance in the last nine months in tough market conditions and depressed economic situation,” said chairman Rashid Saif Al Said.
He added that customer’s preference for lighter profiles led the company to reduction in volumes produced, and that a focus on “value-added” products would help the battle for margin as aluminium prices rise.
Despite a number of government-backed construction drives, including investment in roads and water projects and the award of OR57 million in contract awards this month, the overall Oman market remains sluggish. Al Said cited the reduced pace of developers as a key impact on the resultant demand for aluminium.
Cement and Gypsum Products, the Oman maker of hollow wall panels and flooring, this week posted a OR377,992 loss in first nine months, reversing a OR 404,298 profit from the same period in 2009 as the company awaits big projects to begin.
“If you look at National Aluminium, there had been a summer impact where they were not producing as much, but the sales were maintained in third quarter,” said Sandar Kanag, on the research team at Gulf Baader Capital Markets. “The company has been producing low margin products, for example, pure profiles for windows on residential buildings.” Commercial buildings by contrast, are bigger orders producing higher margins.
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Kanag adds that orders that require colouring or any other kind of finish to the aluminium products can also boost sales margins, and the company also produces made-to-order painted products as well as those for interiors with marble or wood finishes.
The ongoing supply to the big projects in its home country and across the GCC will also be a source of growth for the company, which has put on hold plans for expansion. “If you look at the tie up with the [Muscat-based] Wave Project, that’s been a successful project. It has finished phase one and is just starting phase two.”
National Aluminium Products has a 50% market share in Oman, according to Kanag, with the Sultanate taking up 32% of its total sales, with the GCC in total making up 80%.
Shares closed at OR0.56 on Thursday, their last day of trading, not far from its year-high of OR0.59.
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