COVID-19 impact on Al Kathiri’s cement, concrete sales forecast to end in Q2 2020: CEO

The negative impact of the coronavirus pandemic on Al Kathiri Holding Co.’s cement and concrete sales is expected to end before the beginning of Q3 2020, CEO Meshal Al Kathiri told Argaam in an exclusive interview on Tuesday.

“The coronavirus fallout coincided with the month of Ramadan, when the sector usually sees weak demand and low construction works every year,” Al Kathiri said, expecting a strong recovery in the construction, cement and concrete sectors after lifting the complete lockdown across the Kingdom.

Since March 10, the company has started to reduce working hours and adopt remote working at its factories, a matter that weighed negatively on its revenue growth.

Al Kathiri added that the company has resumed its operations since April, but continued to adopt the required precautionary measures.

On the other hand, Al Kathiri’s projects are on track as scheduled. The three-dimensional concrete panels plant will begin trial production by the end of Q3 2020, and is expected to record SAR 60 million sales revenue on average in three years.

The company is looking for new projects to boost revenue growth going forward.

“Al Kathiri has strong financial solvency and liquidity,” the CEO asserted, noting that a rights issue will be launched upon the board’s recommendation on raising capital.

The related details will be announced soon, he added.

The impact of the Kingdom’s decision to raise the value-added tax (VAT) from 5% to 15% as of July 1 is likely to disappear soon, as cement and concrete are essential products for housing and development projects. The sector will continue to see strong demand.

“I expect prices of products like cement and concrete to be reduced to absorb the new VAT. Accordingly, prices will be back to normal levels and sales growth will limit the impact of VAT increase,” Al Kathiri concluded.