Cement Demand in Saudi Arabia Has Been Rising on The Back of Huge Government

Cement demand in Saudi Arabia has been rising on the back of huge government and private sector projects and an expected surge in public expenditure above budgeted levels will further fuel demand growth, National Commercial Bank (NCB) said in its weekly bulletin. The report expected government expenditure to exceed the budgeted amount by nearly 13 percent to reach SR780 billion during 2012. It said the surge would increase the need for cement to meet the elevated demand levels, adding that production increased by 5.4 million tons to reach 48.4 million tons in 2011 in comparison to 2010 and 2009 s production of 43 million and 37.8 million tons, respectively. The rise in production was accomplished by the addition of new cement factories in the market, noting that Saudi Industrial Development Fund has recently approved a SR300 billion loan to a new factory in Hail city. Against this backdrop, two leading Saudi Arabian cement producers have reported a rise in first quarter 2012 net profit due to higher sales. Yanbu Cement said its first quarter 2012 net profit surged 43.6 percent YoY to SR145 million ($38.7 million). Earnings per share stood at SR1.38, up from SR0.6 from the same period last year. Qassim Cement net profit rose 7.7 percent to SR158.4 million ($42.3 million). First quarter earnings per share were SR1.76, down from SR1.64 a year earlier, NCB study said the rising demand has been reflected by local deliveries growing by 13.6 percent last year, representing 97 percent of production as the remainder was either exported or stocked as inventory. As for 2012, the first two months have witnessed an increase in cement and clinker production by 18.0 and 4.9 percent, respectively over the same period last year. Local demand reached almost 100 percent growth through January-February as vast projects risk raising local prices. "We expect the 2012 production levels to increase in the range of 53-56 million tons, thus, driving corporate earnings higher and supporting expansionary plans to build a much needed capacity, " NCB said. Source: uaecement