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Arabian Cement Q2 profit drops 8.6pc

Riyadh, July 20, 2009

Saudi's Arabian Cement Co posted an 8.6 percent decline in net profit for the second-quarter, in line with a trend of declining profits by Saudi cement companies due to a year-long export ban.

Arabian Cement made a net profit of 82.6 million riyals in ($22.03 million) the three months to June 30, compared to 90.4 million riyals a year earlier, it said in a statment posted on the Saudi bourse website.

"The reason for the decline in profits ... is due to the rise in operational costs and the funding for setting up new units, as well as losses in affiliated companies in the previous six months," the firm said.

The company posted an 11.7 percent decline in operational profits, which amounted to 87.5 million riyals for this quarter.

There has been a trend of declining profits by Saudi cement companies in the quarter, ranging from 2.3 percent by Saudi Cement Co. to a more severe drop of 45 percent by Tabuk Cement.

After domestic cement prices soared last year as the country, which is undergoing multi-billion dollar infrastructure projects, faced a cement shortage, the government imposed an export ban to lower prices.

The ban, compounded by the introduction of new cement production lines, caused an oversupplied local market that pushed cement prices down and profits dropped along with them.

In May the government allowed cement producers to export a portion of their surplus stock on the condition that they sell their product in the local market for 200 riyals a tonne.

Next year  Arabian Cement will launch its first plant abroad, with the capacity of 2 million tons, but will hold off further expansion plans until market conditions improve. - Reuters




Tags: Saudi Arabia | Arabian Cement |

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