Thursday, June 15, 2017

Saudi cement sales fall 18.7pc in January-May

In the first five months of 2017, cement sales volume in Saudi Arabia fell 18.7 per cent year-on-year (y-o-y) to 22.6 million tons, while clinker production declined 11.3 per cent y-o-y, a report said.

Northern and Najran cement witnessed the highest y-o-y decline during the period by 50 per cent and 43 per cent, respectively, said the Saudi Cement Sector Monthly by Al Rajhi Capital, a leading financial services provider in the kingdom.

For the remainder of the year, demand is unlikely to pick up steeply given that construction activities are bound to remain weak.

“Thus, we continue with our 2017 estimate of 14 per cent y-o-y decline in sales volumes (~47 million tons),” Al Rajhi said.

Saudi, Yamama, Yanbu and Najran cement hold 50 per cent of the total inventory in the sector by 4.9 million, 4 million, 3 million and 2.8 million tons, respectively. Hail and Najran cement hold the highest inventories as compared to last 12 month dispatches by 178 per cent and 129 per cent, respectively, while Arabian cement holds only 10 per cent which is the lowest in the sector.

Saudi Cement’s board of directors recommended dividend of SR2.25 ($0.61) per share for the first half of 2017 (vs. SR2.75 for the same period last year).

The cement sector witnessed a YTD decline by 21 per cent (vs. -5.2 per cent in TASI). Companies under our coverage are currently trading at an aggregate forward PE of 14.2x above three-year average of 13.1x. – TradeArabia News Service

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