Najran Cement CEO says COVID-19 impact ‘minimal’ on industry

Najran Cement Co. chief executive officer, Abdulsalam Abdullah Al-Draibi, undermined the impact of the COVID-19 outbreak on the Kingdom’s cement industry, CNBC Arabia reported.

“The pandemic is not forecast to have a negative or heavy impact on the industry, however, it may lead to a recession and recovery slowdown. It will be temporary due to the seasonality factors coinciding with summer season and Ramadan which usually affect sales,” he stated.

The cement industry is a key pillar of Saudi Vision 2030, he added, noting that construction activities were resumed and residential projects are on track.

"In case any of Vision 2030 projects were delayed, this will have a minimal impact on the cement industry," Al-Draibi stressed.

He also highlighted that the industry faced heavier challenges in 2017 and 2018, adding that Najran Cement currently enjoys a strong financial position.

He further explained that the Saudi cement producer adopted a cost-cutting strategy over the past two years to face any potential crisis, and succeeded to lower production costs from SAR 180 per ton to SAR 120-130 per ton.

On the sukuk redemption, Al-Draibi indicated that the sukuk matured on June 11, 2020. The cement producer secured a long-term credit facility at competitive rates to boost cash flows, thanks to its robust financial position.

He also said that the company’s gross debt hit SAR 400 million in Q1 2020, whereas cash balance accounted for SAR 120 million. Net debts stood at SAR 280 million, compared to assets of SAR 2.5 billion.

Last week, Najran Cement said it fully paid off the existing Sukuk worth SAR 355 million. The payment process was financed via a SAR 355 million Sharia-compliant loan from Bank AlJazira that was received on 4 June 2020.