Riyadh Cement’s 2023 results strong; demand to improve in 2024: CEO

Shoeil Al Ayed, CEO of Riyadh Cement Co.

Riyadh Cement Co. posted strong results in 2023 compared peers, CEO Shoeil Al Ayed told Argaam in an interview.

The company's full-year profit edged down as Zakat increased by 25% to SAR 15 million in 2023, compared to SAR 12 million in 2022. In addition, general and administrative expenses grew, represented in the costs of the transition from the Nomu-Parallel Market to the Main Market, at SAR 3 million.

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As part of the localization program, 60 engineers and technicians were appointed and trained at a cost of SAR 3 million, the CEO said.

He added that sales increased by about 100,000 tons in 2023 compared to 2022, despite the decline in demand for cement by 7% across Saudi Arabia by the end of the year.

Moreover, the average price of cement reached SAR 180 per ton in 2023, said the CEO, expecting it to rise to SAR 220 per ton after the increase in fuel prices announced by Saudi Aramco.

The impact of adjusting fuel prices on production costs is estimated at about 24%, which may affect the total costs, Al Ayed said, noting that stable prices amid expected improvement in demand contributes to improving companies’ profit.

Riyadh Cement is working on two projects at a cost of more than SAR 150 million to improve the rationalization of energy consumption and protect the environment. These two projects will likely boost operating reliability, rationalize electricity consumption, and reduce emissions resulting from the operation of plants, according to the CEO.

He added that these projects are systems that convert oven heat into electricity, up to 15 megawatts, which helps reduce electricity consumption.

The company does not have any debts and has robust profit, which allows it to distribute dividends to shareholders on an ongoing basis, as it has maintained the average profit over the years, Al Ayed said.

It plans to distribute profit of SAR 1.55 per share, an increase of 5 halalas over previous years, he added.

He stated that there is optimism in the current year, as it witnessed a slight increase in demand in the months of January and February, backed by mega projects, especially in Riyadh, from which the company will benefit greatly.

Demand for cement is set to increase in 2024 and beyond, supported by mega projects such as the Expo 2030, the Square project, Riyadh Metro extension, in addition to the completion of the second phase of King Salman Park project, the Qiddiya project, and plans to construct sports stadiums before the years 2027 and 2034, he added.

Riyadh Cement posted a marginal decrease of 0.6% in net profit to SAR 188.8 million for 2023, from SAR 189.8 million a year earlier, according to Argaam's data.