Raysut sees sharp fall in operating profit

Oman-based Raysut Cement Co said operating profit fell sharply by 26.7 per cent in the first quarter of 2015 due to a doubling of the price of natural gas supplied by the government and rising transportation costs.

Group operating profit fell to OMR6.02m from OMR8.23m in the same period of 2014. "This is mainly due to the increase in natural gas price by the government to US$3 per MMBtu from US$1.5 per MMBtu effective 1 January 2015 and increase in other costs," Raysut Cement said in its directors' report submitted to the Muscat Securities Market (MSM) on Tuesday.

"Gas is a significant component of cost and the price was doubled. Transportation costs are on the rise due to restrictions on tonnage and the cascading effects of all have significant bearing on the cost of the product," the conpany added.

In addition the company said the disturbances in Yemen one of Raysut Cement's main export markets have had a bearing on sales volume.

Group revenue fell 1.57 per cent to OMR24.43m from OMR24.82m a year earlier.

"Given the situation the company has done extremely well in the first quarter to reach a level of revenue which is close to that of the previous year. By positioning the products in appropriate markets the average price realisation improved neutralising the effect of cost increase to an extent. On the other hand severe competition from UAE suppliers is continuing."

Cement volumes fell 2.98 per cent YoY to 976,019t while clinker volumes were down 46.4 per cent to 3958t over the period.

Raysut Cement said it is in the process of setting up of a 51 per cent subsidiary in association with Barwaaqo Cement Co LLC in Somalia for supplying cement mostly to the African nation through a proposed terminal there. Construction on the Duqm terminal in Oman is underway and it is expected to be completed by 2015, the company added.