The biggest manufacturer in the UAE, Ras Al Khaimah Cement Company (RAKCC), has declared a loss of almost AED4 million with its inventories significantly reduced, as the tighter market resulted in declines of cement sales volumes and values.
RAKCC reported revenues falling by 19.7% from AED283.5 million to AED277 million in 2010. However, the sales costs increased to ensure gross profits of AED4 million, and a total net loss of AED3.94 million.
The annual financial results were recently published, revealing a similar fruitless result last year, where inventories dropped by 18.4% from AED76 million to AED62 million. In addition, the company’s cash position more than halved its value during this time.
The weather has been blamed as cement suppliers in the UAE have had a decrease in margins in the last year. There has been greater competition to supply to active building sites as a drought in building projects has increased. As a result of this, some cement companies are marketing themselves in Oman, despite analyst reports pronouncing the cement boom in the country as finished.
The cement prices in Oman have as a consequence been forced down by a quarter, as Mohammed Bin Alawi bin Ali Muqaibal, chairman of Raysut Cement, recently told investors, from competition from UAE firms. Raysut Cement has seen a 27% loss of revenue - OMR64.98 million compared with OMR89.35 million in 2009 –as Raysut has only sold 2.92 million t of cement and clinker, as opposed to the previous 2.49 million t.
The loss was also generated by the provisions taken for its available-for-sale investments, principally shares for AED2.2 million – although the impairment on these assets was less than the previous year.