Arabian Cement CEO says demand improved in Saudi, profit rose in Q2

Badr Johar, CEO of Arabian Cement Co. (ACC)

Badr Johar, CEO of Arabian Cement Co. (ACC), said that cement demand in Saudi Arabia grew by 1.79% year-on-year (YoY) in the second quarter of 2024.

In a phone call with Argaam, Johar explained that the ACC sales were hurt during the three-month period due to seasonality factors of Hajj and Eid al-Adha, as demand was weighed down in some of the company’s direct markets ahead of the season.

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Arabian Cement maintained a higher level of profitability compared to last year, despite rising production costs and a decline in the company's sales volume. This was driven by internal cost control and better average selling prices.

Demand for cement decreased 1% on an annual basis, due to weak demand in the first half of the year. Accordingly, the company’s local sales decreased by about 3% YoY.

Johar added that the cement producer's clinker inventory reached 3.3 million tons by the end of June 2024, noting that the firm usually maintains the cement inventory in line with sales volume for only five-seven days.

Arabian Cement did not export clinker this year due to lower export prices compared to 2023 and higher cost of some production elements, which weighed on profit margins. This made exporting an available option, but not urgent currently.

Regarding the latest updates on the Rabigh plant, Johar highlighted the receipt and commercial operation of the cement mills, which are manufactured by a global European company specialized in cement equipment.

The mills are currently operating efficiently and reliably, achieving outstanding standards in electricity consumption per ton. In addition, they can double the company's current milling capacities if demand increases.

Further, the CEO expects demand to stabilize in the third quarter compared with a year earlier as this period coincides with the summer season. He also anticipates lower interest rates in September 2024, which will be reflected in demand starting from the fourth quarter of 2024.

ACC reported a net profit of SAR 83.1 million in H1 2024, an increase of 8% from SAR 77.2 million in the year-earlier period. Q2 2024 net profit rose 3% to SAR 28.9 million, compared to SAR 27.98 million in Q2 2023, according to data available with Argaam.