Najran Cement seeks more profitability, sales revenue, says CEO

Najran Cement Co. seeks to boost profitability and sales revenue over the coming period, chief executive officer, Abdulsalam Al-Duraibi said in TV statements.

“We are looking to improve our performance; however, we can’t give any earnings assumptions for the upcoming period,” Al-Duraibi added.

The Saudi Cement producer has already adopted a cost-cutting strategy, which reflected on earnings of Q3 2018, stated Al-Duraibi, adding that Najran Cement has growth potential in local as well as global markets, especially Yemen, thanks to its geographic location.

“As the Decisive Storm operation was launched against Houthi fighters in Yemen, we set up 2.5 million tons of clinker stockpiles to hedge against a sudden demand rise either in Saudi Arabia or in Yemen,” Al-Duraibi explained.

A total of 90,000 tons of cement have been so far exported to Yemen, though there is one border crossing to transfer aid.

The non-compliance with the financial conditions related to the SAR 400 million sukuk was driven by the economic slowdown in the Kingdom, Al-Duraibi noted.

Al-Duraibi also indicated that higher financing costs can be waived in a way by our cost-cutting strategy. Cost of lending for 2018 is expected to hover between SAR 27-28 million, based on the company’s leverage at around SAR 590 million at the beginning of 2018. This debt is forecast to reach SAR 550 million by year-end.

Najran Cement Co.’s sukuk holders have waived any right that may result from regulations and conditions of the SAR 400 million sukuk, maturing in June 2020, due to non-compliance with the financial conditions ending at Dec. 31, 2017.

The decisions made by the company’s general assembly will result in SAR 3 million increase in lending cost every year.