Oman Cement posts 4Q12 record performance

Oman Cement posted the best quarterly performance in the 4Q12 with sales revenue reaching OMR15.308m (US$39.7m) showing an increase of 31.4 per cent YoY and 11.8 per cent on QoQ. The overall profit after tax for the year ended 2012 stood at OMR17.511m which increased significantly by 37 per cent on year thanks to higher sales and improvement in margins.

For the final quarter of 2012, the earnings of the company witnessed a significant jump of 50 per cent YoY and 21.1 per cent on QoQ to OMR4.65m. PAT margins improved to 30.4 per cent levels as compared to 28.1 per cent in the 3Q12. The total revenue including other income stood at OMR59.269m in 2012, witnessing an upsurge of 16.9 per centYoY.

Although the breakup of total income is not disclosed in the preliminary results, the total revenue of the company includes other income which mainly comprises investment income. Excluding the other income, the estimated revenue from the core operations has increased by 19 per cent to OMR57.07m amid strong volume growth. During the nine-month period in 2012, sales volume grew by 21 per cent.

“The increase in cement sales is mainly driven by the increased government planned expenditure to complete the intended infrastructure projects such as ports, airports and roads,” according to the company.

While the realisation for 2012 is estimated to be at OMR24.7/t as compared to OMR25.7/t at the end of 2011.

“The reason for lower blended realisation during the year is mainly on the back of higher offtake in its bulk segment which has relatively lesser realisation as compared to the bag segment,” the company said.

During the year, the total expenditure including depreciation of the company grew by 9.4 per cent YoY to OMR39.576m owing to higher cost of sales as well as increase in depreciation expenses.

The gross profit margins too have expanded by 168bps YoY to 48.2 per cent.

According to a research report by Gulf Baader Capital Markets, the domestic revival cycle in the cement sector which commenced in 2012 is likely to continue in 2013 on the back of existing along with newly-announced infrastructure projects. “Overall we continue to remain positive on the company owing to sustainable sales volume in addition to cement selling price which is expected to hold at the current levels”, the research says.