Al Khalij profits rise as Qatar soaks up cement

Investment company's materials arm adds to last year's gains

Analysts have noted a lull betyween contract awards and payment.
Analysts have noted a lull betyween contract awards and payment.

RELATED ARTICLES: Al Khalij Holding sees operating profits soar 80%Cyril Sweett eyes Qatar market to maintain growth | Anel Electrical wins $20m MEP contract in Qatar

Al Khalij Holding said its net profit rose marginally against last year after selling more cement and gaining more from various investments.

The Qatar company, which produces, imports and exports cement with separate business lines in finance and real estate, said it made QAR 32m in the last six months, up from the QAR 31m, for the same period last year as sales rose 45% to QAR 103.69m.

Despite a rise in total operating income – comprising sales and contract revenue – operating profits fell due to rising costs.

Analysts covering cement companies in the GCC say that, as with the fall in profit at Qatar National Cement Company, the largest supplier in the country, the sector is experiencing the lull between the award of projects and the payment for supplies. Al Khalij sells cement through its fully-owned subsidiary Gulf Cement Company.

Qatar is at the early stages of a boom in construction following the progress of mega developments in the capital, Doha, such as Barwa City and the mixed-use Msheireb development.

This has spurred demand for building materials, which have become more plentiful in the country in the last five years. Ahmad Matar, CEO of Al Arrab Electromechanical, which provided MEP work for seven towers on the Pearl Qatar project, is one of a number of executives to tell CW that supply of materials has improved greatly.

Al Khalij Holding is paying off around QAR 928.57m in long-term debt, according to Bloomberg, the financial data provider. This has ballooned by almost QAR 300m since the end of the third quarter, giving the company an estimated weighted average cost of capital of 12%. The company paid out more than QAR 453.7m to reduce its borrowings for the first six months of the year, according to its latest financial statement, along with QAR 62.16m in dividends.

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