Yanbu Cement eyes cost cuts, output optimization: CEO

Yanbu Cement Co. is developing an integrated program to cut costs and maintain production optimization as part of its sustainability plans to maximize revenue.

“The company’s cement and clinker exports hit 997,000 tons in Q1 2019, or 40 percent of the sector total exports,” CEO Ahmed Zugail told Argaam in an exclusive on Tuesday.

Zugail expects Yanbu to maintain similar levels in the second quarter of the year as well.

The local cement sector faced significant changes over the last two years amid weak demand. Accordingly, the market is seeking to adopt the best policies to overcome current challenges and reduce losses from shipping to far regions.

“Demand has not improved in Q1 2019. The sector sales dropped 9 percent year-on-year in the first quarter,” he added, noting that the government’s mega projects like NEOM, the Red Sea, and Qiddiya are still in the planning and design phase.

“On the other hand, a rise in average selling prices is mainly attributed to two reasons. Firstly higher exports in Q1 2019, which led to better cash flows, and competition for the western region that accounted for 60 percent of those exports,” Zugail continued.

“Secondly the companies’ ability to control clinker inventories, which led to reconsideration of their selling policies. Therefore, Yanbu Cement’s average selling prices in the Saudi market jumped nearly 20 percent,” he concluded.