Saudi Arabia’s cement sector is expected to witness a drop in revenue in the second quarter (Q2) of the year, according to a report released by Al Rajhi Capital, a leading financial services provider in the kingdom.

The companies under Al Rajhi’s coverage are expected to report a ~6 per cent year-on-year (y-o-y) decline in revenue, whereas earnings are likely to fall by ~10 per cent y-o-y, said Al Rajhi’s Q2 2018 earnings estimates report.

The cement sector’s sales volume declined 16.7 per cent y-o-y in the first two months of Q2, which we believe is due to restructuring in the industry and the seasonality effect (summer, Ramadan month and Eid holidays).

On a quarterly basis, sales volumes are expected to be lower than the previous quarter, due to the seasonality effect. In the first two months of Q2 2018, 15 cement companies have reported y-o-y decline in sales volume, led by Riyadh Cement (-44.1 per cent y-o-y) and Cement City (-37.5 per cent), while only two companies have reported an increase viz Tabuk Cement (+82.4 per cent y-o-y) and Hail Cement (+28.7 per cent).

However, the total inventory for the sector has increased slightly by 1.2 per cent q-o-q (~36.2 million tons by the end of May) as account of increased production and declining sales. - TradeArabia News Service