Qassim Cement’s Q1 impacted by fuel prices, says NCBC

Qassim Cement’s weak Q1 results were a result of higher costs stemming from increased fuel prices, NCB Capital said in a report released Sunday.

Net profit for the Saudi cement producer fell 16.8 percent year-on-year to SAR 135 million, and it missed NCBC and consensus estimates by 5.4 percent and 11.5 percent, respectively.

“We believe the variance from our estimates is from a higher than expected cost/ton due to the revision of fuel prices,” NCB Capital said. “Similarly, we believe these higher costs were the main reason behind the YoY decline in earnings.”

The brokerage firm expected a cost/ton of SAR 104/ton, but believe it may have reached as high as SAR 114/ton during the period.

Fuel prices were raised in December 2015 as the Saudi government cut back on subsidies. 

NCB Capital, however, affirmed its “neutral” rating on Qassim Cement, while raising its target price to SAR 70.2.