Umm Al-Qura Cement initially expects SAR 19 mln drop in 2022, 2023 net profit on cement mill technical failure

Logo of Umm Al-Qura Cement Co. (UACC)

Umm Al-Qura Cement Co. (UACC) revealed its initial estimates of the financial impact of the major technical failure in one of the components of Cement Mill No. 1, according to a statement to Tadawul.

The financial impact of the foreseen 145-day downtime in 2022 is a SAR 4.8 million drop in net profit. This in addition to the expected maintenance costs, which are estimated at SAR 2.5 million, paired with a possible increase of SAR 900,000 in the total fixed costs, bringing the total decrease in the expected net profit for the year to SAR 8.2 million.

As for the financial impact of the expected 272-day downtime in 2023, a SAR 9.1 million decline in total net profit is anticipated as a result of this technical failure, besides an estimated SAR 1.7 million hike in fixed costs. This is bound to trim net profit to SAR 10.8 million, UACC added.

This means that the total expected downtime is 417 days, leading to a SAR 13.9 million drop in net profit. This is besides maintenance costs, which are estimated at SAR 2.5 million, as well as the increased total fixed costs of SAR 2.6 million, pushing net profit down by SAR 19 million.

UACC, however, seeks other alternatives to cut down the repair period and bring the mill back to its normal production in less-than-the-expected downtime. The cement producer will announce any future developments in due course.

Last October, UACC announced that a major technical failure took place in a primary component of Cement Mill No. 1 on Aug. 9, 2022, which led to stopping the mill and decreasing the sold quantities by 1,161 tons per day (tpd), according to data available with Argaam.