Al Jazeera Steel 2010 net profits hit $4.93m
Oman supplier gains from rising demand and material prices in region
Oman’s Al Jazeera Steel Products posted a net profit of OR 1.9 million for 2010, reversing the heavy loss of the previous year, as the company looks to capitalise on restocking activity among regional customers and further construction activity.
The maker of hot and cold rolled black pipes, as well as galvanised products, said its gross profits more than doubled, from OR 4.116 million OR 8.585 million, with a reduction in distribution costs relative to sales. Operating profit soared to OR 4.14 million against OR 954,358 the previous year, with end net profits showing a strong resurgence from the OR 774,040 loss of 2009.
The price of steel products required across construction, energy, utilities and other industries rose for much of last year in reaction to a spike in raw material prices, including a rise in iron ore driven by renegotiated contracts by some of the world’s biggest miners in April.
Sulaiman Mohammed Shaheen Al-Rubaie, chairman of Al Jazeera Steel Products, pointed out to shareholders that these price increases came at the same time that “local markets witnessed an overall increase in demand with restocking taking place” though these prices dipped again by the middle of the year.
A diversification of raw material suppliers helped the company reduce concentration risk, control inventory, and linked with cost-cutting measures internally to help generate profits.
The company said it began commercial production of its Merchant Bar Mill in the last quarter of 2009. Further, it has built a “steady order book” for tube mill products that has interested clients in Europe and North America, with steel pipe demand locally expecting to rise due to the high levels of public spending planned and resurgence in the capital markets.
“KSA’s real estate sector has huge potential especially in light of its young population and its ability to absorb new supply of real estate units,” according to Al-Rubaie in a statement. “In addition, demand for steel products in Qatar is expected to significantly increase, with the large construction projects lined up for the 2020 World Cup.”
Al Jazeera shares closed down 0,33% to 0.298 riyals. They have fallen 5.3% in the last ten days.