Equity Analysis /
Saudi Arabia

Saudi Cement Monthly: Ramadan adjusted sales in line with ytd declines

    Mohamed Tomalieh
    Mohamed Tomalieh

    Associate, Equity Research Analyst

    SNB Capital
    14 July 2019
    Published bySNB Capital

    In June 2019, local cement sales increased 17.9% yoy to 2.4mn tons. However when adjusting for the Ramadan effect, combined sales of May and June declined by 7.7% yoy. This is in line with the ytd declines of 8.4% yoy. We believe this trend will continue through H2 19, as we believe demand from mega projects will remain limited. However, we believe growth in export sales of clinker will support overall sales in 2019.

    Local sales: Local cement sales increased 17.9% yoy to 2.4mn tons in June 2019. This reduced ytd declines to -8.4% yoy.

    Export sales: Cement exports stood at 0.15mn tons in June 2019 vs 0.09mn tons in June 2018. Clinker exports stood at 0.28mn tons in June 2019 vs 0.35mn tons in June 2018.

    Production: Clinker production declined 9.0% yoy to 3.9mn tons in June 2019. This took ytd production decline to -3.3% yoy.

    Inventory: Clinker inventory increased 12.1% yoy (+3.3% mom) to 42.6mn tons in June 2019.

    Market share: Yanbu Cement gained the largest market share on local sales at +102bps to 8.3%, while Al Jouf Cement lost 103bps to 2.9%.

    Outlook: We believe exports (8mn tons in 2019f) will support overall sales performance in 2019, with demand from mega projects expected as of Q1 20. We believe companies in the Western region are best positioned to benefit from both export opportunities and demand from mega projects.