Oman: competition reduces Raysut Cement’s profits

Oman's Raysut Cement is losing market share at home as rival UAE players offer competitive cement pricing. The country's largest cement maker reported a 28% fall in annual profit.

Net income declined to OMR14.9m (US$38.6m), in line with analyst estimates, from OMR20.7m (US$53.7m) a year earlier, the company said in a filing to the Muscat Securities Market yesterday. Sales costs increased to OMR61.9m from OMR41.7m a year earlier, the company said.

Oman is moving ahead with a series of infrastructure, airport and port developments, which many thought would mean bumper profits for Omani cement makers. But this has not been the case. In the aftermath of the Dubai property crash of late 2008, contracts for building projects have drastically diminished, creating a surplus of materials.

Cement companies in the Emirates have looked to Oman for a market for their products, causing "severe competition" for Raysut Cement, said Ammar Salem, an analyst at Oman Arab Bank.

Cement in Oman is about OMR25/t, but UAE prices are as low as OMR20/t. UAE cement imports currently cost about OMR22-23/t after transport to Oman.