Najran Cement Company sees fall in profits for Q2 2022
Cement volume for the period was impacted by lower construction activity, though the report highlighted the feeling that the cement volume fall had reached the bottom
The Najran Cement Company has said that its gross profit has dropped by 34% year-on-year, while its operating profit fell by 52.3% year-on-year on lower revenue, and the resultant fall in operating leverage in the second quarter of 2022.
According to a report by Al Rajhi Capital Research, the cement company’s gross margins fell to 28.5% for Q2 2022, compared to 35.5% in the previous year. The company also registered a revenue of $28.75mn, which was a y-o-y fall of 17.9% – this was attributed to a 6.6% y-o-y fall in cement volume and lower average realisation.
However, the report pointed out that revenue was higher than an initial estimate of $26mn. This was due to higher-than-expected cement volume, even as the realisation was broadly in line with expectations.
In July 2022, Jose Vera-Agullo, ACCIONA R&D Concrete Manager shared insights on how to keep concrete cool while working in high-temperature areas with Middle East Construction News.
“We expect the sector performance to improve, aided by stable mortgage offtake and favourable movement of construction material prices, which have started to fall. We also expect the average cement realisations of Najran Cement to remain at these levels. Overall, we reduce our target price to SR15/share from SR17/share and maintain our rating at Neutral,” the Al Rajhi report said.
It added that for Q2 0222 the cement volume of Najran Cement fell by 6.6% y-o-y, close to the industry performance, which on an average fell by 6.4%, but was better than the performance of the Southern region, which registered a fall of 13.2%.
Cement volume for the period was impacted by lower construction activity, though the report highlighted the feeling that the cement volume fall had reached the bottom and expected the performance to gradually improve.
In July, Saudi Arabia and Iraq announced their intent to move forward on an electricity interconnection project, while later in the month, SNC-Lavalin said it was awarded a FM services contract for the PPP schools project in KSA.
