Arabian Cement's net profit of SAR 16 million in Q4 2018 came in line with Al Rajhi Capital's estimates of SAR 17 million supported by higher other income, offsetting weak gross margin, the brokerage noted in an earnings review.
Revenue stood at SAR 175 million, beating the brokerage and consensus estimates' of SAR 146 million and SAR 163 million, respectively, led by higher realized cement prices and better selling price at the Jordanian subsidiary.
Gross margins narrowed to 10.3 percent in Q4 2018 from 36.2 percent in Q3 2018, significantly below Al Rajhi’s expectation, due to higher-than-expected rise in production costs.
The brokerage maintained a "neutral" rating on the stock, revising the target prices at SAR 25 a share.
"We believe that the company is likely to increase the payout further in 2019, owing to healthy cash position, high retained earnings level and highly valuable liquid asset," the report added.
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