Triggered by a boom in real estate and construction activities in Qatar and Oman, revenue of GCC cement companies grew by 13.8 percent to reach $1.4bn in Q1 2013.
The top-line of Qatari companies increased the most during the quarter by 10 percent. Oman stood second reporting a growth of six percent, while Saudi Arabia reported an increase of 3.2 percent during the first quarter.
Qatar witnessed a sizeable increase in profitability by 12.8 percent year-on-year in Q1, 2013. Profitability reached $47.2m in the first quarter as compared to $41.8m in Q1, 2012. Consolidated revenues of the sector increased by 10 percent to $106.5m during Q1, 13 as compared to $96.7m in Q1, 12. The reported increase in the sales revenue can be to the growth in sales reported by Qatari Investors Group Company. It's revenue increased by 37.4 percent, a market analysis by Global Investment House (GIH)noted.
Cement price in Qatar have remained mostly constant since last couple of years. In Q1, 13, average cement prices in Qatar remained around same at $70.1/ton which was equal to the average in 2012 and 2011. The same prices have prevailed since last couple of years because of government control.
The report noted debt levels of the Qatar's cement sector decreased by 6.0 percent to $291.5m in Q1, 13 as compared to $310.0m in Q1, 12. Qatar National Cement Company was able to shed off more than 75 percent of its debt during the period.
In terms of margins, Qatari gross margins rose to 49.1 percent in the first quarter of the current year as compared to 42.5 percent witnessed in Q1, 12. Amongst the two companies, Qatari Investor Group profit was higher at 56.7 percent while that of Qatar National Cement Company (QNCC) was at 45.6 percent.
Net margins increased to 44.3 percent in Q1, 13 compared to 43.2 percent in the same period last year. Qatari companies are shifting to a more efficient and operative environment, as non-core income contribution to net profits deceases and all other factors including revenue and operating profit increase.
The analysts noted that QNCC is going to increase its cement capacity by 0.93mtpa to 5.36mtpa owing to expectation of increase in demand in the coming years. QNCC is expected to increase capacity by a new 5,000tpd production line to face upcoming demand and to continue to position itself as the largest producer in Qatar.
The GIH Global Research estimates that the demand for 2013 provided by government authorities to the Company are higher than current demand of 3.5-4.0mtpa (metric tons per annum).
The estimated the average demand in Qatar during 2013-15 would be 5.5mtpa which is expected to rise further to 10.0mtpa during 2017-20 as the large scale projects related to the World Cup 2022 near.