Oman Cables net profit rises 22% on demand jump
Manufacturer gains from product and market expansion during 2010
Oman Cable Industries saw net profits rise by more than a fifth in 2010 against the previous year as projects and expansion into new markets boosts the supplier’s balance sheet.
The Rusayl-based manufacturer of electrical wires and cables saw after-tax gains reach OR 8.165 million for the group, up from OR 6.674 million posted in 2009, a rise of 22%. Sales rose 29% to OR 200 million from OR 155.6 million with gross and operating profits rising despite an increase in the cost of sales.
The company produces low and medium voltage cables along with building wires and overhead transmission line conductors. It has been aggressively expanding throughout the Middle East to add to extensions to its production facilities and products, citing a rise in energy demand regionally and globally as a key driver. Sales for the first half of 2010 had risen more than 20% against the same period in 2009.
“The development within the cable industry is further refined to the conducting materials such as copper, aluminium, aluminium alloys and enhanced insulating materials with unique properties for specific applications,” the company states in its report to investors, published on the Muscat Securities Market website.
“Oman Cables is well positioned in having the complete product spectrum for transmission and distribution of electric power and is also at the forefront of the latest technology developments in the application fields.”
Infrastructure development around the GCC, partly funded by a rising oil price, will also spur further sales, the company believes. The ‘backward integration’ of a project producing aluminium rod and conductor manufacturing in Sohar is fully operational and is expected to strongly boost sales.
The GCC is now a net exporter of cables due to excess supply from the assumption of growth between 2006-2007. As with cement, this has had a negative impact on price levels at a time when the demand is on a downward trend. Spikes in metal prices have also tempered trading returns.
“The sharp and sudden rise in metal prices has disrupted the execution of the orders by the customers in time, thus exerting pressure on the company’s production planning and imbalance in capacity utilization,” the company reports. OCI posted a loss of more than OR 930,000 last year for changes in its portfolio of commodity and currency derivatives contracts, used to hedge against price inflation.