According to NCB Capital’s (NCBC) latest Equity Research Report on the Saudi cement sector, the industry is showing signs of recovery, with demand beginning to improve to normal levels. NCBC is the leading provider of investment services in the Kingdom.
Mohamed Tomalieh, Equity Research Analyst at NCBC, stated that the average y/y fall in sales since November 2013 totalled 7.9%; however, sales in May 2014 increased by 3.1% y/y, the first increase since the end of the government amnesty for migrant workers in November 2013. The growth supports the company’s forecast of increased demand in 3Q14; full demand recovery is anticipated in 4Q14.
However, Tomalieh further noted that the previous slowdown in demand and increased costs from imports will have a negative impact on earnings growth in 2014. On an adjusted basis, NCBC believes that the y/y earnings growth for the companies under its coverage will be 1.1% in 2014E.
Edited from various sources by Rosalie Starling