Arabian Cement, a leading industrial group in Saudi Arabia, reported a revenue of SR175 million for the fourth quarter of 2018, up 49 per cent over the previous quarter.

However, the 2018 figures were down 29.3 per cent when compared to the previous year, said the Saudi Al Rajhi in its review.

The company reported in-line fourth-quarter earnings of SR16 million last year, mainly supported by other higher income, thus offsetting weak gross margin, said the report.

Top-line grew over 48 per cent quarter-on-quarter largely driven by better-than-expected realized prices, both domestically and at Jordanian subsidiary as well, stated Saudi financial group Al Rajhi in its latest review.

However, the Saudi company witnessed a 29 per cent drop in earnings when compared to the figures of 2017, it added.

So far in Q4 earnings, Al Rajhi said it had observed a sharp increase in realised prices for most of the cement producers including Arabian Cement, reflecting their shift towards higher pricing strategy.

The Q4 revenue figures beat the Al Rajhi estimate of SR146 million and the consensus SR163 million) estimates, led by higher realised cement prices (SR165 per tonne in Q4 vs. SR127/tonne in Q3) along with better selling price at the Jordanian subsidiary.

However, gross margins narrowed to 10.3 per cent in Q4 from 36.2 per cent the previous quarter, significantly below the Al Rajhi expectation.

The company might have generated around SR20-25 million nonoperating income, which has largely offset the impact at the net profit level. Consequently, net profit came in at SR16 million, broadly in line with their estimate of SR17 million.

Saudi Al Rajhi said it expected cement production costs to return to normal levels in the future. "Accordingly, we revise our cement sales price forecast for the future periods and a marginal pick in sales volume.

"Further, we expect a continued recovery in the Jordanian operations," it added.

On its future outlook, the financial expert said Arabian Cement had a healthy cash position, valuable liquid assets and on-market average dividend distribution. "Therefore, we revise our TP to SR25/sh. as well rating to Neutral on the stock," it added.-TradeArabia News Service