Qatar National Cement gross rises 25% on cost cuts

Dominant manufacturer sees revenues fall but net gains rise a fifth

The company saw sales costs fall by half against 2009.
The company saw sales costs fall by half against 2009.

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Gross profit at Qatar National Cement Company rose by nearly a quarter last year against 2009 as a steep fall in sales cost compensated for a 28% fall in revenue.

The country’s biggest manufacturer of the building product saw pre-tax gains leap from QR421.6million to QR509.5million between the two years, according to its latest financial statement.

The cost of sales fell by almost half from QR1.09billion to QR580.5million to make up for the slide in revenue from QR1.5billion to QR1.09billion. A fall in finance charges and a smaller loss from available-for-sale assets saw net profits rise almost 12% from QR417million in 2009 to QR466.9million.

Despite a decline in the value of its non-current assets – which includes its property, plant and equipment and investment in property and securities – the company’s level of inventories rose 48% against the previous year, from QR296.8million to QR439.5million.

Qatar National Cement is the dominant individual supplier in the country, though there are other cement manufacturers competing as part of conglomerates, such as Gulf Cement Company, which has a plant in Ummbab and is part of the listed investment company Al Khalij Holding.

Hettish Kumar, senior financial analyst at Kuwait-based Global Invetsment House, said in July the company “has a good, local supply of raw materials and fresh plants, and its margins are good”, adding that the company has benefited from a number of the projects in which it has supplied material have been going ahead as planned.

Kumar recommended a ‘hold’ on the stock on 6 May, whereas Rajat Bagchi an analyst at NBK Capital, recommended an ‘accumulate’ approach to the stock on 2 November.

The share price soared at the start of December, leaping QR 37 from QR88 to QR125 between 1 December and 12 December, spurred by the country’s successful bid to host the 2022 football world cup.

A surge in the cement index in Saudi Arabia on 8 December, smashing the 4,000 mark for the first time in seven months, was attributed by an analyst in Bahrain to the possibility that the Kingdom would allow its many cement companies to export cement to Qatar for the stadia and infrastructure work needed for the event.

Qatar National Cement Company shares fell 0.5% yesterday to close at QR119.5.

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