Qassim Cement net slips in tough market and fines
Delays to production line adds to profit falls for Saudi manufacturer
Qassim Cement Company saw net profits for the fourth quarter and the year overall fall, as the company struggles in a tighter market as only one of two companies that failed to sell more last year than 2009.
After-tax returns fell from SAR173.48 million to SAR112.78 million, down 35%, for the last three months of 2010 against the same period the previous year, though operating profits rose 19.21% to SAR122.75 million and gross profit rose 11.4%.
“The reason for the decline in the consolidated net profit during the fourth quarter ... was due to the decline in the other income which fell by SAR82.5 million being represented by the proceeds of fines and compensation derived from the delayed implementation of the work of the production line no.3 project from the contractors and suppliers,” the company stated to the Tadawul in Riyadh yesterday.
Net profits for the full year fell 16.8% - from SAR602 million to SAR500.86 million – and operating also fell more than 3% due to, the company states, the decline in the volume and values of sales.
Cement manufacturers in Saudi Arabia have seen an erosion of sales over the last year due to an increasingly saturated market. Though there is no explicit ban on exporting cement, the criteria that must be met does not provide an incentive to do so.
Export sales declined between 2008 and 2009 – from 2.8 million tonnes down to 1.2 million tonnes – according to Argaam, the corporate web portal. Qassim Cement Company and Yanbu Cement Company were the only two companies to not have sold more last year than in 2009, according to Argaam statistics, as cement sales overall in Saudi Arabia increased by 13%.