Yanbu, Almarai post better-than-expected results: NCB Capital

NCB Capital said Yanbu Cement Company and Almarai Company both posted “better-than-expected” results, after the Saudi companies released their Q2 earnings on Sunday.

Yanbu Cement reported earnings of SAR 246 million in Q2-2015, increasing 2.3 percent year-on-year, beating the investment firm’s estimates by 11 percent.

“We believe the variance is due to lower-than-expected cost/ton. We estimate a cost/ton of SAR 112, similar to Q1-2015, and believe it could have been as low as SAR 100.5,” NCB Capital added.

A positive read-across is the possibility of lower discounts offered by Yanbu Cement, the third-largest cement producer in the kingdom, indicating that larger players may have controlled the discounts offered in Q2-2015.

Almarai Company, one of the top dairy and poultry producers in the kingdom, reported an in-line set of Q2-2015 results, with net income increasing 22.4 percent YoY to SAR 530.4 million.

“We believe this is driven mainly by a strong growth at the poultry segment and the dairy & juice segment,” the firm added.

Moreover, lower commodity prices supported gross margins, which reached their highest levels since 2012. Poultry losses declined to the second lowest levels since 2013, “with loss margins standing at all-time lows of 17.3 percent, which we believe is a positive catalyst,” NCBC added.