Arabian Cement saw positive results; low demand led to lower sales: CEO

Arabian Cement Co. CEO Badr Johar

Arabian Cement Co.’s CEO Badr Johar said that the company achieved positive results on cutting production costs and improved average selling price compared to the same period of the previous year, where these improved results were accomplished despite a decline in the profits of associate companies.

In an interview with Argaam, Johar added that the decrease in the quantities sold by the company is directly tied to a 9% decline year-on-year (YoY) in demand in the Kingdom’s cement market, while the company's sales declined by 3%.

He explained that the decline in demand was a result of the slowdown in a number of residential projects in the Western Region, which affected the company's sales quantities.

The CEO pointed out that the company held back on the quantities exported within the work plan for the current year due to the unattractiveness of prices and the high financing costs for customers abroad, as the amount of clinker exported amounted to about 56,000 tons compared to 395.000 tons during the same period a year earlier.

ACC periodically evaluates the global market, prices and shipping costs, following which it determines the quantities.

The CEO noted that there has been a noticeable improvement in the revenue of the Jordan subsidiary, along with the quantities of local sales as well as exports to an Arab country. He added that ACC closely monitors the the selling prices of energy products as they are one of the key factors affecting cost of production.

The company’s clinker inventory reached 2.1 million tons by the end of the first quarter 2023, which is approximately equivalent to six-month production level.

The CEO also expects prices to remain stable in the second quarter of this year. Sales volumes were negatively affected as a result of the religious seasons, holidays and the beginning of the summer season, during which the working hours of the construction sector are reduced by three hours per day in line with the decision to stop work under the sun starting from mid-June.

According to data available in Argaam, the cement producer’s profits increased 17% to SAR 49.2 million by the end of the first quarter of 2023, compared to SAR 41.9 million during the same period of 2022.