Yanbu Cement Q3 revenue down 13.6% to $55.4m
RIYADH, November 1, 2021
Yanbu Cement (YCC) registered revenue of SR208 million ($55.4 million) during the third quarter of 2021, a y-o-y fall of 13.6% and was in line with an estimate of SR203 million, said Al Rajhi Capital, a leading financial services provider in Saudi Arabia.
“Fall in sales was attributed to a fall in the average cement realisation, which was also lower than our estimates,” Al Rajhi Capital noted.
Lower construction activity, due to the new building code, delay in the execution of infrastructure projects, and shortage of labour, and high clinker inventory in the industry has put pressure on cement prices.
Cement sales volume too fell 12.0% y-o-y and 5.6% q-o-q and was in line with our expectation. Gross profit and operating profit fell by 43.6% y-o-y and 55.0% y-o-y respectively and were impacted by lower revenue and higher cost of production, due to maintenance activity in the company. Cement volume in the industry fell by 12.3% y-o-y, while Western region volume fell by 14.2% y-o-y.
YCC’s performance was in line with the industry performance and outperformed the regional Q3 2021 performance.
“We expect construction activity to remain weak in Q4 2021, resulting in subdued prices. Though cement volumes are likely to improve from Q3 2021 levels, the same is likely to remain lower on a y-o-y basis. Given this, and the recent maintenance activity undertaken by YCC, dividend pay-out for 2021 is likely to be subdued,” Al Rajhi Capital said in its review.
“We estimate, dividend per share to fall to SR1.75 per share in 2021e, from SR2.25 per share in 2020. However, we expect the scenario to improve by H1 2022, at the back of steady mortgage growth and an improvement in the execution of mega and giga projects.
“Added to this, post the maintenance activity, we expect the production process to improve, which is likely to aid in lower cost of production. We expect the impact of this to be reflected in H2 2022. Overall, we maintain our target price at SR40/share and maintain our rating at ‘Neutral’,” it added. – TradeArabia News Service
