Southern Cement 2018 net profit hit by lower revenue: Falcom

Southern Province Cement Co.’s (SPCC) net profit dropped for the fourth consecutive year to SAR 195 million in fiscal year 2018, a 47.4 percent year-on-year (YoY) decrease.

“The most important factor remained the shrinking topline, which has remained a concern for the Saudi cement industry,” Falcom Financial Services noted in an earnings review.

Revenues in 2018 fell 16.6 percent YoY to SAR 888 million, despite an increase in the sales volumes (3.5 percent YoY), on lower selling prices.

Gross profit declined 38.2 percent YoY to SAR 262 million weighed by a slowdown in sales even though the cost per ton declined during the year. Gross profit margin fell to 29.5 percent from 39.8 a year earlier and 52.4 percent in 2016.

Operating profit fell 42.5 percent YoY to SAR 215 million, while operating margin declined to 24.2 percent from 35.1 percent a year earlier.

The company proposed a dividend of SAR 1 per share for the second half of 2018, bringing the total dividend for the year to SAR 2 per share, amounting to SAR 280 million.

The research firm has maintained a “Neutral” rating on the stock, with a revised target price of SAR 42.1 per share.