SPCC registers 15% fall in revenue for Q2 2021
Revenue impacted by a 10.9% y-o-y fall in cement volume, Al Rajhi Capital report says
Southern Province Cement Co (SPCC) has registered a revenue of $76.4 million for Q2 2021, marking a year-on-year fall of 15.3%, higher than the estimated $71.7 predicted, Al Rajhi Capital, a top provider of financial services in Saudi Arabia, has said.
In its latest report, Al Rajhi Capital said that revenue was impacted by a 10.9% y-o-y fall in cement volume. Cement sales volume for Q2 2021 came in at 1.4 million tons, 9.8% higher than estimated.
Gross profit and operating profit fell by 27.2% y-o-y and 28.3% y-o-y respectively. The fall in profitability was at the back of lower volume and the resulting fall in operating leverage. For Q2 2021, cement volume for the industry grew by 21.3% y-o-y, while the Southern region offtake fell by 5.1% y-o-y. The performance of both the industry and the region was better than SPCC.
“Going forward, we expect cement volumes of SPCC to remain under pressure in Q3 2021 at the back of lower construction activity in the Kingdom due to uncertainties relating to the new building permit norms and shortage in labour,” the report said.
“However, we expect the situation to improve by Q4 2021. We also expect SPCC’s dividend in 2021 to come under pressure and fall below 2020 levels, due to its ongoing capex plan of replacing its production line in Jizan.
“Overall, we reduce our target price to SR75/share from the earlier target price of SR97/share and maintain our rating at ‘Neutral’,” it concluded.
