City Cement’s capital cut to positively impact performance, profitability: CEO

City Cement Co.’s capital cut due to surplus will have a positive impact on the company’s performance and profitability, CEO Majed Al-Osailan told CNBC Arabia.

Al-Osailan further explained that this step will further boost the capital efficiency.

On the impact of the COVID-19 pandemic, he said that the financial results for the second quarter of 2020 were good and significantly satisfactory despite the precautionary measures and curfew in some Saudi regions along with seasonality factors, as the company did not halt production.

In addition, City Cement recorded zero exports during the crisis and will study the feasibility of future exports, Al-Osailan noted.

He also said that the company’s clinker inventory covers 5 months, compared to the industry’s stockpiles that exceeds 10 months, adding that the company is closely monitoring inventory levels to ensure meeting market and customers demand.

The Saudi government’s decision to counter the economic repercussions of coronavirus helped mitigate the negative effects of the crisis, Al-Osailan stressed.

Moreover, he expected a stronger demand for cement in the upcoming period due to the government’s mega and diversified projects across the Kingdom.

According to data compiled by Argaam, the Capital Market Authority (CMA) approved City Cement’s request to reduce capital to SAR 1.4 billion from SAR 1.89 billion by reducing shares to 140 million from 189.2 million.