Net profits for Q1 2019 have increased at two of Saudi Arabia’s Tadawul-listed cement producers – Narjan Cement Co and Hail Cement – bucking predictions made earlier this year that the kingdom’s cement sector would decline in 2019.
For the three months ending 31 March, 2019, net profits at Narjan Cement Company – located in the kingdom’s south – stood at $1.6m (SAR6m), a 159% increase on Q1 2018, when it reported a loss of $2.7m (SAR10.2m).
The firm, in its filing on Tadawul, said its Q1 2019 profit figure compared to its corresponding 2018 loss was “mainly due to an increase in sales volume, decrease in production cost per ton, and an increase other income, despite the decline in price per ton”.
Figures from Hail Cement in Saudi’s Northern region were equally as positive.
Net profits in Q1 2019 stood at $6m (SAR22.5m), a whopping 436% increase on Q1 2018 when the corresponding number stood at $1.2m (SAR4.2m).
Hail reported $18.3m (SAR68.6m) in revenue for Q1 2019, up 41% on the $13m (SAR48.7m) in cash brought in during the first three months of 2018.
“The main reason for the increase in net income in the current quarter compared to the same quarter last year is due to more sales quantity and better selling price,” the firm said in its bourse filing.
The figures come just months after a Saudi Cement Sector report by Al Rajhi Capital said that demand for cement would “continue to decline in 2019", on the back of limited supply capital spending by government, coupled with rising construction costs.
“The government’s announced megaprojects, including Neom, Qiddiya, The Red Sea Project, and social housing [schemes] are likely to create an incremental demand only in the long-term, in our view,” the report added.