x Abu Dhabi, UAETuesday 25 July 2017

Lower prices hit Fujairah Cement

The country’s cement companies have benefited from a boom in infrastructure spending, which has increased demand for construction materials. However, Fujairah Cement has struggled to remain profitable amid price falls.

Fujairah Cement recorded a Dh12 million loss last year as lower prices pushed down revenues despite increased sales.

In a filing posted on the Abu Dhabi Securities Exchange (ADX) yesterday, the company said revenues were Dh588m last year, compared to revenues of Dh569m and a gross profit of Dh35m the year before.

“The market has not increased in our favour,” said Murthy Veasi, the company’s finance manager. “Prices have come down by nearly Dh10 [per tonne] on average. The sale price reduced, while the quantity sold increased.”

The company shifted 2.1 million tonnes of cement last year, compared with 1.8 million tonnes in 2012.

Sales made to users in the UAE decreased slightly, to Dh242m from Dh258m. But sales to GCC countries increased by Dh21m to Dh331m, up from Dh310m last year.

The company also recorded Dh13m of sales to firms outside of the GCC region. It did not sell cement to non-GCC companies in 2012, according to the filing.

This increased variable costs, said Mr Veasi, including labour and resource costs.

The country’s cement companies have benefited from a boom in infrastructure spending, which has increased demand for construction materials. However, Fujairah Cement has struggled to remain profitable amid price falls.

Fujairah Cement has also spent money on expanding plant capacity, said Mr Veasi.

“We invested money into a planned expansion – but other companies invested outside,” he said. “We have no programme to make new investments.”

In 2011, the company posted a loss of Dh2m, and broke even in 2010, when it recorded a profit of Dh210,833.

Fujairah Cement holds Dh1.7 billion in assets. Its main cement plant is located in Dibba, Fujairah.

The company’s shares, which are traded on the ADX, remained unchanged yesterday at Dh1.25 each. The stock experiences only low volumes of trades, with no transactions involving the company recorded on 17 days this month.

abouyamourn@thenational.ae

Follow us on Twitter @Ind_Insights