Yamama Cement Q4 net profit misses forecast, says Albilad Cap

Yamama Cement Co.’s net profit for Q4-2016 of SAR 43 million missed Albilad Capital’s and the consensus estimates of SAR 107 million and SAR 114 million, respectively, the brokerage said in an earnings report.

Fourth quarter earnings fell 23 percent compared to the previous quarter on lower selling prices and a provision regarding Yemen Company investment.  

Net profit for FY16 dropped 40.5 percent to SAR 366 million compared to SAR 615 million in 2015, due to higher cost of goods sold (COGS) driven by higher fuel prices and depreciation, in addition to lower sales due to drop in demand and  lower revenue from investments.

Total sales in Q4 reached SAR 233 million, down 34 percent YoY, while revenues declined 15 percent YoY to SAR 1.1 billion for 2016.  

Yamama’s sales volume dropped 23.8 percent YoY to 1.18 million tons compared to 1.55 million tons in Q4 2015, while sales for 2016 were down 8 percent to 5.36 million tons YoY.

The drop in selling prices has affected the company profit, wherein the average selling prices shrank sharply during Q4 2016 on the back of intense competition among cement companies in the central region of the kingdom amid lower demand, the report said.

“We expect that the gradual removal of subsidies on energy products to significantly impact profitability margins going forward.” Albilad Capital said.

The brokerage maintained an “overweight” rating on the stock and downgraded the target price to SAR 22 per share from SAR 29.5.