Yamama Cement’s Q1 beats estimates, says Al Rajhi Cap

Yamama Cement Co.’s Q1-2017 net profit of SAR 50.8 million topped Al Rajhi Capital’s estimate of SAR 32 million.

“Yamama’s earnings were negatively impacted by weak demand as company’s sales volume fell 25 percent y-o-y, and lower average realized price/ton (-22 percent y-o-y and -8 percent q-o-q),” Al-Rajhi Capital said in an earnings note on Wednesday.

However, the earnings beat was attributed to lower than expected cost per ton due to valuating the company’s fixed assets which resulted in lower depreciation coupled with higher than estimated sale price per ton.

Yamama’s gross profit and operating profit plunged 66 percent and 72 percent YoY, respectively.

The cement producer is expected to maintain its market share, thanks to high production capacity-- even after the recent cut--and high inventory levels.

Al Rajhi Capital affirmed its “neutral” rating on Yamama Cement with a target price of SAR 17.8.

The brokerage firm added that no major catalysts are available for the stock in the near term, in light of plant relocation plans and challenging operating environment.