Arabian Cement Co net rises 48% despite gross fall
Jeddah manufacturer's costs increase but 2010 after-tax takings strong
Arabian Cement Company said net profits last year rose by almost half against 2009 despite a fall in gross profits, as higher sales costs met with lower volumes in an increasingly saturated market.
The Jeddah-based firm said pre-tax takings reached SAR 318.9 million, down 18.3% from SAR 390.2 million the previous year, a slide the company attributes to higher costs against the amount being produced. The company has halted certain production lines for maintenance work and this has driven up expenses on inventory costs and fixed costs.
But net profits soared from SAR 172 million to SAR 255.4 million, or 48.5%, due to a decline in “allocations that are configured for what has been allocated in the past year”, from SAR 147 million allocations in 2009 to SAR 25 million.
Operating profits rose 18% to SAR 288 million.
The strong rise in net profits may surprise some analysts as the company had been posting falls in after-tax gains for almost the whole of 2010. First-half net profits fell 13% against the same period the year before, with net profits after nine months down 6%.
Other major suppliers have seen strong gains in net priofits for 2010 against the previous year. Saudi Cement COmpany saw its net rise 13% due to a boost in manufactuting, while Yamamah Saudi Cement Company's net gained 17%. Tabuk Cement saw net gains rise 1.82% for the year despite a 6% dip in net profits for the fourth quarter.
ACC has a plant in Rabigh area of Saudi Arabia with clinker capacity kilns of 2.5 million tonnes per annum and grinding capacity of around three million tonnes per annum. The company’s wholly owned subsidiary is Arabian Cement Company, Bahrain; it also has a stake in Qatrana Cement Company (85%) in Jordan. It also has stakes in brickmakers and readymix suppliers.
Shares closed down 0.3% to SAR 31.2 yesterday. They have fallen 8.7% since the start of the year, including a shock SAR 3 drop over a weekend between 26th and 29th January.