Total cement sales in Saudi Arabia fell 6.8 per cent year-on-year to 47 million tonnes in the first ten months of 2016, from 50.2 million tonnes for the same period last year, said a report.
Revenues declined 19 per cent and the sector’s aggregate net income came in at SR853 million (down 22%), mainly due to a sharp increase in the cost of goods sold.
In a sign of continuing woes for the industry, Saudi cement inventories continued to rise with a 16.4 per cent year-on-year growth driven by a fall in sales volumes and record production levels, said the Al Rajhi Capital Research report.
Interestingly, the aggregate clinker production increased one per cent on a year-on-year basis in spite of a 15 per cent y-o-y drop.
On the future outlook, Al Rajhi Capital Research said: “Going forward, we believe that construction activities will remain weak for the foreseeable future as the government spending adjusts to low oil prices through spending cuts and prioritization of projects.”
“In November and December, we expect cement demand to remain modest, and achieving a positive y-o-y growth could be a challenge for companies. However, we expect clinker production to increase given the probability of further reduction of subsidies in the short-term,” it added