Yanbu Cement CEO: Competition, rising costs weighed on profit

Yanbu Cement Co.’s CEO, Ali Al-Ayed

Yanbu Cement Co.’s CEO, Ali Al-Ayed, attributed the company’s profit decline to intense competition that pushed selling prices lower amid limited demand growth, in addition to rising input and transportation costs.

In a phone interview with Argaam, Al-Ayed said the company is making strong efforts to streamline fixed cash costs, though other factors continue to limit the impact of these efficiency measures.

He explained that the profit decline is a trend affecting most cement producers, noting that limited demand growth comes at a time when the industry operates with substantial installed capacities far exceeding current market needs.

Al-Ayed went on to say that while regulators have set a maximum selling price per ton, no minimum price has been established, leading to price levels that could result in losses for some companies. He added that, given current market conditions, the profit level is acceptable but falls short of expectations.

He noted that Yanbu Cement’s export sales have grown significantly, adding that the company aims to surpass 3 million tons by the end of the year, despite global competition from lower-cost producers.

Yanbu Cement’s clinker inventory has declined to around 5.5 million tons, down from 6.5 million tons last year, according to the CEO. Cement is not stored for long periods or in large quantities.

He said the company’s high product quality is well recognized in export markets. However, fierce global competition and rising production costs have weakened its ability to export at prices that would offset the decline in the local market.

Al-Ayed added that both domestic and international clients prioritize the company’s high-quality products when marketing to their own customers. However, prices remain volatile and are generally trending downward, making it difficult to set clear price levels under current conditions.

He also noted that there are no strong indicators pointing to meaningful demand growth in the company’s domestic markets, though he remains hopeful for better growth in the near future.

According to Argaam data, Yanbu Cement’s net profit fell to SAR 51.5 million in the first half of 2025, down 47% from SAR 98.1 million in the same period of 2024. Second-quarter profit came in at SAR 21.6 million.