Future quarters expected to see lower cement volumes and producer revenue
The Saudi cement sector has not witnessed any impact from the coronavirus pandemic in terms of the year-on-year volume growth during the first quarter of 2020, a new report from Al Rajhi Capital has found.
According to the report, the total market volume in Q1 grew by 33% on an average, when compared to the previous year. When combined together, the companies under the report’s coverage also witnessed similar year-on-year average growth, it added.
From the companies under its coverage, Qassim Cement reported the highest y-o-y growth of 53%, followed by Yanbu Cement and Yamama Cement, with y-o-y growth of 43% and 38% respectively.
However, restrictions imposed by the government to reduce the spread of the virus have resulted in project delays, the report said, adding that this may directly impact the demand in the Kingdom, which cause under-utilisation of capacities.
Along with the Ramadan season, these circumstances are expected to lower cement volumes and thereby the revenue of producers, mainly in the month of April and May. The report added that Tabuk Cement has already made an announcement, stating that it expects the impact of the coronavirus epidemic to be reflected in its financial results.
The pandemic has further hit oil prices, driving them to their lowest, which means that government spending could be curbed within the country. This could disrupt current and future projects, including housing and infrastructure, the report concluded.