Oman's Raysut Cement eyes 'fierce' 2019 after UAE, Yemen hurdles
Muscat-listed company charts 'fierce marketing strategy' to avoid oversupply and socio-political roadblocks of 2018
Oman’s Muscat Securities Market-listed (MSM) Raysut Cement Company said it will roll out a “fierce marketing strategy” in 2019 as it faces market challenges such as oversupply from the UAE, oil price changes across the world, and “socio-political disturbances in Yemen”.
In its financial disclosures for 2018, Raysut Cement – which sells its products in Sohar, Muscat, Duqm, and Yemen – said revenues grew by 26.6% last year, when its earnings were recorded at $236.3m (OMR91m) – a significant hike over 2017’s corresponding figures of $186.4m (OMR71.8m).
Revenue growth was attributed to increased sales, driven by product mix diversification and pricing policy changes.
Raysut Cement’s parent company operates terminals in Sohar, Muscat, and Duqm, and has an associated firm in Yemen. The firm operates an integrated plant in Salalah, and fully owns subsidiaries Pioneer Cement Industries in Ras Al Khaimah, Raysea Navigation SA, and Raybulk Navigation, in addition to a 51% stake in subsidiary Raysuit Burwaqoo Cement Co.
UAE-based Pioneer’s main markets are the Emirates, Bangladesh, and Oman, and Raysut Cement co is also exploring the establishment of a cement plant in Georgia.
Group-wide production hit 3.398 million tons of clinker and 3.326 million tons of cement in 2018, with overall production respective up by 14.5% and 14% over 2017. However, the group noted a profit decline during the year due to higher raw material costs, increased shipping costs, new expenses relating to shipment vessel rentals, maintenance activities, and lower interest income.
Raysut Cement said the group’s profit after tax reduced by 94% to $883,000 (OMR340,000) in 2018 from 2017’s post-tax profit of $15m (OMR5.81m).
CEMENT MARKET OUTLOOK 2019
A management statement on MSM, undersigned by Raysut Cement Co’s board chairman, Ahmed bin Yousuf bin Alawi Al Ibrahim, stated that the company saw “demand for cement improve in Oman due to increased construction activities in Al Wusta”, but “excess capacity, led by UAE producers” caused substantial price cuts across the market and made “the situation very competitive for domestic producers”.
Raysut Cement’s report added: “The parent company continued facing competition in the northern markets from [UAE supplies] at low prices. Due to socio-political disturbances in Yemen, the parent company’s sales are almost the same as [2017’s], and other export markets witnessed growth of 89% as compared to last year.
“On the whole, the period ahead is challenging for the company, and the management is hoping to improve its market presence with a fierce marketing strategy, pursuing opportunities for newer markets, and a change in pricing policy in export markets.”