Arabian Cement CEO says prices likely to stabilize in Q1 2022, inventory levels high

Arabian Cement Co. CEO Badr Johar

Arabian Cement Co.’s (ACC) selling prices are expected to stabilize in the first quarter of 2022 despite the slight decline in January sales year-on-year (YoY), CEO Badr Johar told Argaam in an exclusive.

He added that the average cement selling prices fell by nearly 14% YoY in 2021 in the Western Province, while other provinces witnessed further declines due to the fierce competition among cement producers.

Commenting on the fourth-quarter financial results, Johar said they were impacted by low average selling prices and high exports compared to a year earlier despite the 7.7% YoY increase in the local sales volume.

ACC's 2021 sales increased by 25% compared with a year earlier, the CEO noted, adding that the Western Province witnessed 7% growth in demand, while the sector, in general, saw a 1.7% rise.

The decline in average selling prices and the depreciation provision of some under-construction projects affected the cement producer’s profit.

ACC’s export sales amounted to nearly 1.5 million tons of clinker and 100,000 tons of cement in 2021. Meanwhile, the company’s inventories fell to 2.1 million tons of clinker during the same year.

“The company has strong levels of cement inventories at average sales of five to seven business days,” Johar said.

With regard to the dispute against Emaar The Economic City (Emaar EC), the top official said it is still under consideration before the judicial authorities and memoranda are exchanged between the parties in this regard. He added that the company will announce any relevant developments in due course on Tadawul website.

The dispute is related to the contract of assignment and compensation for overlap in the company's concession area with the deed of Emaar EC, Johar said, adding that ACC waived the overlap area and did not receive the full compensation amount agreed upon in accordance with the contract between the two parties.

As for the developments of the project to establish new cement mills in Rabigh, the CEO said no company has been awarded the project so far, indicating that an evaluation is currently being carried out by a specialized entity for the remaining works of the project by the contractor.

After completing the evaluation, the project consultant appointed by the company will discuss the best ways to complete the project in light of the continuing travel restrictions on the contractor's labor from China.

ACC reported a net profit after Zakat and tax of SAR 161.5 million for 2021, a drop of 13% from SAR 184.9 million last year. Q4 net profit rose 56% YoY to SAR 23.3 million, according to data compiled by Argaam.