Displaying items by tag: Southern Province Cement

Many Saudi Arabian cement producers have reported increased annual sales and profits in recent weeks. Southern Province Cement’s sales revenue rose by 27% year-on-year to US$440m in 2020 from US$347m in 2019. Net Profit after zakat and tax increased to US$162m from US$123m. Other producers enjoyed similar boosts. The reason can be seen in the country’s domestic cement sales. They rose by 21% year-on-year to 51Mt in 2020 from 42Mt in 2019. After a promising start to the year the coronavirus pandemic hit local production hard in the second quarter of 2020. However, it nearly doubled year-on-year in June 2020 and kept up the pace thereafter.

Graph 1: Domestic cement sales in Saudi Arabia, 2010 – 2020. Source: Yamama Cement.

Graph 1 above puts the cement sales in 2020 into context over the last decade. Sales hit a high in 2015 but then started to wane as infrastructure spending dried up due to lower oil prices and decreased government spending. A ban on exporting cement was subsequently relaxed but the general market appeared to adapt to the new situation. This changed significantly in 2020 with analysts attributing the turnaround to programs organised by the Ministry of Housing. This growth has carried into 2021 with NCB Capital forecasting an increase of 3.5% in local cement sales in 2021 due to the ongoing housing programs, the country’s so-called ‘Giga’ projects and investment by its sovereign wealth fund, the Public Investment Fund (PIF), as part of its 2021 - 2025 strategy. They reported that demand created by the country’s large-scale projects began to be felt along the supply chain in the fourth quarter of 2020 and associated contracts have started to be issued.

To give an example of the scale of some of these schemes, one of the proposed giga projects is to build a new city called Neom from scratch near the Red Sea coast. The resulting conurbation is intended to showcase new technologies and diversify the Saudi Arabian economy away from hydrocarbons. It has a price tag of US$500bn. An airport was built in 2019 and a next step was announced in January 2021, introducing a 160km linear city without roads called ‘The Line.’ Doubtless it will require lots of cement to realise the dream in whatever forms it happens to end up taking.

The wider picture here is that global oil prices hit a low in April 2020 as coronavirus lockdowns triggered a worldwide drop in demand although they then started to recover. The International Monetary Fund (IMF) estimates that Saudi Arabia’s gross domestic product fell by just under 4% in 2020. In response the PIF has upped its investment in the local economy including in the ‘Giga’ projects like Neom. There has been scepticism internationally about whether these projects will progress any further beyond press releases and actually get built. However, the cement producers’ financial results, cement sales figures and reporting from analysts like NCB Capital show that some investment is happening and it’s having results. The sector still faces a battle against overcapacity. It had a production utilisation rate of just under 70% despite the increase in cement production in 2020. Yet cement producers in Saudi Arabia have done well. While the Saudi Arabian government continues to spend on infrastructure in order to rebalance its economy this looks set to continue.

Saudi Arabia: Southern Province Cement has appointed Hamad bin Sulaiman Al-Bazai as the chairman of its board of directors. Other appointments include Muhammad bin Nasser Al Nabit as vice-chairman of the board and Saud bin Safar Al Burgan as secretary.

Saudi Arabia: Southern Province Cement has appointed Aqeel bin Fateis bin Saeed Kadsa as its chief executive officer (CEO). He was assigned to the position in July 2020. He holds a degree from the King Fahd University of Petroleum & Minerals and joined Southern Province Cement in 1997. Most recently he worked as the Executive Vice President for Manufacturing Services.

Saudi Arabia: Southern Province Cement has appointed Aqeel Futis Kadasa as its chief executive officer (CEO) following the resignation of Safar Mohammad Dhufayer. Kadasa holds a degree in chemical engineering from King Fahd University of Petroleum & Minerals and has over 25 years of working experience. He started his work at Yamama Cement, then worked in the Saudi Electricity Company in the Department of Engineering Services and later joined Southern Province Cement in 1997.

Saudi Arabia: In a report on 17 Saudi cement companies including itself, Yamama Cement recorded a year-on-year increase of 24% in sales volumes to 4.27Mt in November 2019 from 3.45Mt the previous November. The volume produced was 4.30Mt, up by 22% from 3.54Mt in November 2018. Mubasher has reported that the country has 1.22Mt of cement in inventory, 3.8% more than the 1.18Mt it held at the end of November 2018. Southern Province Cement Company (SPCC) led the month’s sales, with 0.61Mt.

Saudi Arabia: Southern Province Cement’s sales revenue rose by 37% year-on-year to US$165m in the first half of 2019 from US$121m in the same period in 2018. Its net profit after Zakat and tax grew by 53% to US$56.3m from US$36.8m.

Saudi Arabia: Southern Province Cement’s sales fell by 16.5% year-on-year to US$237m in 2018 from US$283m in 2017. Its net profit after Zakat and tax nearly halved to US$52m from US$98.7m. The company blamed the fall in sales and profit on lowering prices, despite higher sales volumes.

The cement producer has also announced renewal of its export licence from the Ministry of Trade and Investment. It will export up to 1Mt of clinker and 0.5Mt of cement for a year from 13 February 2019.

Bangladesh: Saudi Arabia’s Southern Province Cement has signed a deal with Peakward Enterprises in Hong Kong to export 1.5Mt of clinker to Bangladesh. The first shipment was scheduled to start on 31 December 2018 and they will run until the end of June 2020. No value for the contract has been disclosed.

Saudi Arabia/Yemen: Southern Province Cement has signed a deal to sell 20,000t of cement to Yemen. The deal will last for three months. It started in early December 2018 with the export of a 7000t consignment. It follows a similar agreement that Tabuk Cement agreed in late November 2018 to export products to Yemen.

Saudi Arabia: Southern Province Cement’s sales fell by 9.6% year-on-year to US$73m in the first quarter of 2018 from US$80.8m in the same period in 2017. Its net profit fell by 2.9% to US$27.2m from US$28m. It blamed the falling sales and profit on decreased demand.