Saudi cement sector continues to remain under pressure in Q3: Al Rajhi Capital

The Saudi cement sector continued to remain under pressure in Q3 2018, with the average sales volume dropping 12.5 percent year-on-year or YoY (albeit at a slower pace than the previous quarter’s decline of 15.4 percent YoY), Al Rajhi Capital noted in its report on Tuesday.

The aggregate revenue of all the public listed cement companies declined 18.6 percent YoY in Q3 2018 (9M 2018: -21 percent YoY), the brokerage firm said in the report.

“We observed that some companies recorded a significantly lower cost per ton, which, in our opinion, is primarily due to their higher than normal clinker production relative to cement production,” it noted.

“Going forward, we believe the cement demand might improve, on the back of higher government spending in the coming years, however, prices are unlikely to pick up soon, due to huge excess inventory and stiff competition,” Al Rajhi Capital said while remaining on neutral on the sector.