Gulf cement producers boosted their net income by more than 19 per cent in the first quarter of 2010 although the value of awarded construction contracts dived by over 70 per cent.
Figures by the Kuwaiti-based Global Investment House (GIH) showed the net earnings of the cement companies in the six-nation Gulf Co-operation Council (GCC) grew by 19.1 per cent to around $421.49 million (Dh1.54 billion) in the first quarter of this year from about $353.9m in the first quarter of 2009.
GIH said the profits were higher despite a decline of around 71.3 per cent in awarded projects to $8.9bn from nearly $31bn in the same period. The value was also down by nearly 85 per cent compared with the fourth quarter of 2009.
The report showed the total value of planned projects in the GCC, which has been affected by the global fiscal turmoil and lower crude prices, dipped by around 14.6 per cent.
From about $2.66 trillion in the first quarter of 2009, the value slumped to nearly $2.27trn in the first quarter of 2010, according to GIH.
“This decline was due to the repercussion of the global financial crisis and regional default problems,” the report said.
It showed the UAE, which has the largest share of those projected, recorded the biggest decline of 26.6 per cent to $966.7bn from $1.3trn. Kuwait’s project value fell by 6.1 per cent while there was a drop of 3.4 per cent in Saudi Arabia and Oman, 0.7 per cent in Bahrain and around 0.6 per cent in Qatar, the report showed.
“On a yearly basis, the fourth quarter of 2009 is still considered as the strongest quarter for construction contracts awarded. The months of December and July 2009 witnessed the largest single months during which construction contracts awarded.” A breakdown showed the combined sales revenue of the GCC cement companies fell by 13.1 per cent in the first quarter of 2010 but costs of production and sales receded by 11.9 per cent.
Gross profit plunged by around 21.8 per cent but other income sharply recovered to $65.2m from a loss of about $30.3m during the same period.
“The financial position of cement companies became much stronger as assets and equity increased by around 3.9 and 7.9 per cent respectively in the first quarter of 2010. On the other hand, debt and liabilities decreased by 12.3 and 5.7 per cent.”
The GIH report showed Saudi Arabia, the world’s largest oil exporter, was the only GCC country to record growth in sales revenue in the first quarter of 2010 as they increased by 7.9 per cent. Sales revenue in the other members dipped by five to 38 per cent.