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Yanbu Cement's Q1 revenue down 17.4pc on poor sales

RIYADH, May 21, 2022

Leading Saudi group Yanbu Cement (YCC) has registered a revenue of SR242 million ($64.4 million), a y-o-y fall of 17.4%. Gross profit fell by 33% y-o-y, while operating profit fell by 41.4% y-o-y.
 
However, this was higher than the estimate of Al Rajhi Capital, a leading financial services provider in the kingdom, which had forecasted SR224 million ($59.6 million)
 
Yanbu had attributed the drop in sales to a 6.7% y-o-y plunge in cement volumes and a fall in the average cement realization. Cement sales volume for Q1 2022 came in at 1.3 million tonnes, broadly in line with Al Rajhi Capital estimate.
 
Lower revenue and the resultant fall in operating leverage impacted profitability, as gross margins fell to 22.5% for Q1 2022, compared to 27.8% a year back.
 
For Q1, cement volume of YCC fell by 6.7% y-o-y, better than the industry, which on an average fell by 10.1%, and the performance of the Western region, which registered a fall of 10.0%. 
 
However, cement prices were weak and fell on a y-o-y basis resulting in pressure on the operating performance of the company, said the statement from Al Rajhi. 
 
"We expect construction activity to remain weak; along with this, with a clinker inventory of 34.7 mn tons, in April-22, which is around seven months of production (LTM), we expect the average realization to remain under pressure," it stated.
 
However, there could be a slight recovery in both the volume and prices post H1 2022, as we expect marginal recovery in demand backed by an improvement in the execution of mega and giga projects, it added.



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