Saudi Arabia's cement industry looks forward to good times

Saudi Arabia's cement companies are preparing for long-term cement demand growth as they expand their capacity. However, for some such as Yanbu Cement, the past quarter has seen earnings contract.

NBK Capital raised Yamama Cement’s share value from SAR52.50 (US$14.00) to SAR54.42. Several new megaprojects are scheduled to come online, which are expected to drive longer-term cement demand. In addition, cement demand had been heavily focussed towards the Western Region in the past two years, but is now predicted to the central part of the country, which is Yamama’s Cement home market. The company is also planning to increase its production capacity to three lines, adding up to 30,000tpd to the firm’s total capacity. The new plant is expected to cost SAR4-4.5bn.

Meanwhile, National Commercial Bank (NCB) has entered a SAR700m, five-year financing agreement with Southern Province Cement (SPCC). Prince Abdullah bin Musa’ad bin Abdul Rahman, chairman of the Southern Province Cement Company and Mansour S Al Maiman, chairman of the National Commercial Bank, signed the deal in Riyadh in the presence of officials from SPCC and NCB Corporate Banking group.

However, Saudi Arabia’s Yanbu Cement Co (YCC) reported net earnings of SAR205m for the first quarter of 2014. This represents a decline of 17 per cent compared with SAR247m a year ago.