Arabian Cement turns profitable in FY14 on Jordan unit: Analysis

Arabian Cement Company (ACC), the first cement producer in Saudi Arabia and the Arabian Gulf, recorded SAR 1.720 billion sales in fiscal year 14. Net profit for the same fiscal year soared 236 percent year-on-year to SAR 646.4 million at SAR 6.46/share.

This profit uptick was boosted by the strong performance of ACC’s 86.7 percent-owned unit, Qatrana Cement in Jordan. The plant has been operating on a commercial level since since April 2011, with a production capacity of to 5,000 TPD of clinker.

The cement plant, however, sustained losses in 2011-2013 due to SAR 378 million asset impairments, in addition to allocating SAR 87 million and SAR 291 million in provisions in 2012 and 2013, respectively. However, no write-offs took place in 2014, reflecting positively on net income.

The Jordan-based plant generated SAR 95 million earnings in the first quarter of 2014, rising nearly 15 percent y-o-y, versus SAR 274 million losses incurred in year-earlier period. Sales reached SAR 347 million in fiscal year 2014, representing 20 percent of the company’s revenue.

This profit growth was attributed to higher selling prices, cost efficiency and coal conversion.

In March 2013, Arabian Cement signed a three-year contract with Northern Cement, which stipulated that ACC provides 700,000 TPA of clinker through its cement-producing subsidiaries in Jordan and Rabigh.

ACC posted a 26 percent rise year-on-year in fiscal year 2014 revenue to SAR 1.720 billion. In addition, gross profit jumped 35 percent year-on-year to SAR 731 million, compared to SAR 542 million a year earlier, according to data available on Argaam.

The below table indicates Arabian Cement’s FY14 financial results, as compared to last year.

The Tadawul-listed cement producer generated SAR 430 million revenue in fourth quarter 2014, leaping 23 percent year-on-year. Earnings in the fourth quarter of 2014 reached SAR 145.6 million, versus SAR 106 million losses in fourth quarter of 2013.

The below table indicates Arabian Cement’s quarterly financials during 2014: