Arabian Cement Q2 net profit drops 8.6%

Saudi's Arabian Cement Co posted on Monday an 8.6-per-cent decline in net profit for the second-quarter, in line with a trend of declining profits by Saudi cement companies due to a year-long export ban. Arabian Cement made a net profit of SR82.6 million ($22.03 million; Dh81 million) in the three months to June 30, compared to SR90.4 million a year earlier, it said in a statement posted on the Saudi bourse website. "The reason for the decline in profits ... is due to the rise in operational costs and the funding for setting up new units, as well as losses in affiliated companies in the previous six months," the firm said. The company posted an 11.7 per cent decline in operational profits, which amounted to SR87.5 million for this quarter. There has been a trend of declining profits by Saudi cement companies in the quarter, ranging from 2.3 per cent by Saudi Cement Co to a more severe drop of 45 per cent by Tabuk Cement. After domestic cement prices soared last year as the country, which is undergoing multi-billion dollar infrastructure projects, faced a cement shortage, the government imposed an export ban to lower prices. The ban, compounded by the introduction of new cement production lines, caused an oversupplied local market that pushed cement prices down and profits dropped along with them. In May the government allowed cement producers to export a portion of their surplus stock on the condition that they sell their product in the local market for SR200 a tonne. Next year Arabian Cement will launch its first plant abroad, with the capacity of 2 million tonnes, but will hold off further expansion plans until market conditions improve. Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here .