Arabian Cement sees robust demand, persistent price pressure in Q4: CEO

 

He, however, anticipates continued pressure on prices due to the existing gap between supply and demand in the market, with demand falling 7% during the first nine months of 2023.

 

The CEO indicated that the profit decline in Q3 2023 was mainly due to the fall in average selling prices year-on-year despite sales volume increasing year-on-year (YoY) and quarter-on-quarter (QoQ).

 

Export sales reached 329,000 tons in Q3 2023, down 55% from 736,000 tons a year earlier, as a result of global inflation and a decline in the local currency exchange rate against the US dollar in several developing countries, Johar said. This affected the priorities of cement-importing countries, which prioritized their basic needs rather than allocating their resources to development projects.

 

He added that the company's market share in the local market rose to 6.6%, noting that the clinker stockpile reached 2.75 million tons, equivalent to 10 months' worth of sales.

 

Johar stated that demand for housing projects was weighed by the high cost of mortgages, noting that the Ministry of Municipal, Rural Affairs and Housing exceeded its targets in the past period in raising the ownership rate, which led to amending the support programs and directing them to the most deserving segment.

The move led to a decline in ownership applications, affecting the building and construction activities, the CEO said.

 

Johar expects work to resume on the Jeddah Tower during the second quarter of 2024, while work is ongoing on a number of projects owned by Public Investment Fund's (PIF) companies in Jeddah Governorate.

 

He pointed out that the demand for cement is expected to pick up upon implementing the plan to develop the removed slums in Jeddah Governorate, whose area is estimated at more than 32 million square meters.

 

Arabian Cement’s net profit fell 27% to SAR 106.9 million in 9M 2023, compared to SAR 145.9 million in the prior-year period. The Q3 fell 50% YoY to SAR 29.7 million.