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Pain continues in Saudi cement sector

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World Cement,

The pain continues in the Saudi Arabian cement sector as two more cement companies reported significant 4Q16 falls in profits, following steep declines in profitability at Arabian Cement and Hail Cement.

Najran-based Najran Cement Co. reported a 72.5% fall in net profit from SAR53.7 million in 4Q15 to SAR14.8 million in 4Q16. On the previous quarter, net profit was down just under 4%.

“Decrease in net profit is mainly attributable to lower volumes due to slow cement demand because of [a] slow down of construction activities and the increase [in] energy prices,” the company said in its announcement to the Saudi Arabian Stock Exchange (Tadawul). These more than offset an increase in the average selling price and a fall in distribution costs, the company added.

Net profit for the year was down 51.2% at SAR124.8 million on revenue of SAR710.4 million, a fall of 34.6% on 2015’s revenue of SAR1.1 billion.

Meanwhile, Northern Region Cement Co. announced a year-on-year fall of 57.3% in quarterly net profit to SAR16.9 million. Quarter on quarter, net profit fell 43.8%.

Net profit for the year stood at SAR138.7 million, a 33.0% fall on the previous year’s total of SAR206.9 million.

The cement market in Saudi Arabia has deteriorated significantly since the end of Eid in September 2016, according to IA Cement, on the back of government austerity measures and weak private sector demand. IA Cement expects the weak demand to continue into 2017, falling 4 – 5%.

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