One of Saudi Arabia’s top three cement companies hopes restructuring and revenue-improving policies will help it recover ground after a decline in sales and net profits.

Yamama Saudi Cement Company has said it is rationalising costs and operational expenses and streamlining production to safeguard its market share.
The company also began implementing this year a restructuring programme recommended by an international consultancy. Yamama did not elaborate on the restructuring.
To reduce overall costs and concentrate on its main business, the company last year sold its paper sacks plant to Cement Products Industry Co of Jeddah in which it owns a third of the equity.
And with a view to raising competitiveness and profits, Yamama plans to introduce new cement products for the local market.
Net profit announced for first-quarter 2009 plunged 36 per cent to SR 125.9 million ($33.5 million), compared with the corresponding period in 2008.
But it was almost 50 per cent above its fourth-quarter 2008 level. Its results were more or less in line with those of several other Saudi companies who saw profits contracting but well above the levels of the fourth quarter.

Stockpiles
Growing capacity and the ban on exports were largely blamed for the slide in performance but the Saudi government’s large-scale spending on infrastructure has made it possible to utilise available output.
Yamama’s improved Q1 performance compared with Q4 2008 has raised optimism that it might be possible to stem the slide reflected in 2008 figures.
That year, Yamama’s net sales dropped to SR1.12 billion from SR1.18 billion in 2007 while net profits plunged 16 per cent to SR610.8 million.
In terms of volume, Yamama sales were 4.3 million tonnes against 4.6 million tonnes in 2007 at a time when overall consumption in the kingdom climbed 11 per cent to 29.8 million tonnes.
The company attributed the drop in sales to increased competition with the emergence of new producers, expansions undertaken by some companies and the suspension of cement exports. Another reason it said was the maintenance work that Yamama conducted which curtailed supplies from some lines.
Yamama noted that the Saudi Central Region accounted for most of its sales while it managed to export some volumes in the first half of 2008. Sales within the kingdom were 4 million tonnes in 2008 against 4.2 million tonnes in the previous year.

Manufacturing details
The company manufactures both ordinary and sulphate resistant cement in its factory in Riyadh.
Providing details, it said the annual production capacity of the kilns was 6 million tonnes of clinker and 6.3 million tonnes of cement. Clinker production was 4.6 million tonnes in 2008 compared to 4.2 million tonnes in the previous year, up 11 per cent. All kilns operated with their full production capacities throughout the year with the exception of some stoppages resulting from major maintenance programmes. Cement production was 4.3 million tonnes in 2008 compared with 4.6 million tonnes in 2007, a 6 per cent decline.
As well as Cement Products Industry Company, Jeddah, Yamama has investments in Industrialisation & Energy Services Co (5.6 per cent of the paid-up capital), Kayan Petrochemicals (0.3 per cent), Sahra Petrochemical Co (1.16 per cent), Kuwait Sudanese Holding Company (6.67 per cent), Arabian Shield Insurance Co (5 per cent) and Hail Cement Co (5 per cent). The company has invested SR50 million in Islamic deposits for two years.
Yamama and other Saudi cement companies are hoping that the government steps in with a relaxation of the ban on exports.

Capacity expansions
Looming on the horizon are capacity expansions expected to materialise in the short-term.
Cement output capacity is expected to double to 60 million tonnes within the next three years as existing companies expand and new producers enter the market.
But for the moment, the Saudi government wants to ensure that state-run infrastructure projects will not have to contend with a situation where locally manufactured cement is going abroad to the detriment of supplies needed for the projects.
According to Hettish Kumar, analyst from Kuwait-based Global Investment House, cement prices may face downward pressures with the expected addition of 4 million tonnes this year in new capacity.