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Omani cement company to expand into Somalia, Yemen

Oman Daily Observer
Thursday, June 6, 2013
By Samuel Kutty

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MUSCAT — The Board of Directors of Raysut Cement has resolved to approve the company’s plans to go in for a series of expansion abroad and in the Sultanate. As part of the plan, the country’s largest cement manufacturer will establish modern state‐of‐the‐art Cement Terminal inside Duqm Port for storing, packing and distribution of cement, with all the facilities including two silos in the capacity of 4,000 MT each.

This is expected to commence operation in the second half of 2014, the company says in its statement to the Muscat Securities Market. Also the board has given its approval for establishing a modern state‐of‐the‐art Cement Terminal in Berbera Port in Somalia, as a joint venture with one of the local partners for storing, packing and distribution of cement, with all the facilities and equipment including three silos in the capacity of 4,000 MT each.

“This development and expansion will have positive impact on the performance results and profitability of the company in the future,” the company says in its note. The other two decisions of the board include approval for establishing a grinding plant in Mukulla, Republic of Yemen through the sister company — Mukulla Raysut — as a joint venture with a local partner in the capacity of 0.5 million metric tonnes per annum and expansion of production capacity and production processes of its subsidiary, Pioneer Cement Industries LLC in Ras al Khaimah, UAE.

The plant in Yemen will carry out grinding and packing of cement in Yemen, while the project in Ras al Khaimah includes an additional cement silo and upgrading the cooling system and environment management systems. The estimated cost of the above projects is expected to be about RO 9.2 million ($24 million).

Earlier in the report of the company’s performance for the first quarter, Shaikh Ahmed bin Alawi al Ibrahim, Chairman of the Board of Directors, said: “Supplies of cement from the UAE are likely to continue until larger developments take shape in the UAE and in neighbouring countries beyond Oman.”

Consequently, the pressure on demand and price would continue from supplies out of the UAE during the year. “However, the company’s strategy to expand its market base through supplies to Yemen, East Africa and to other GCC countries has helped,” he said. Total revenues earned by the Group rose two per cent to RO 25.22 million in the first quarter, 2013, as against RO 24.64 million in the same period of the previous year. Profit before tax stood at RO 9.13 million as against RO 6.84 million in the same period last year, an increase of 33 per cent.

“In spite of the severe price competition from the UAE suppliers, and the volatility in the export market, the company has achieved a Sales Revenue out of its Salalah operation of RO 18.17 million during the period of three months against RO 16.68 million achieved during the corresponding period in the previous year, an increase of 9 per cent,” the Chairman said. Profit before tax of the parent Company stood at RO 8 million this year, as against RO 5.59 million earned during the corresponding period of last year, an increase of 43 per cent.

“The increase in profit is attributable to higher sales volume in cement, better price realisation through market optimisation as well as due to reduction in cost compared with that in the previous year. The increase in the market value of investment since the beginning of the year has some impact in the net profit too,” he said. During the period, the Sales Revenue net of inter-company adjustments, earned by Pioneer Cement amounted to RO 7.05 million compared with RO 7.96 million achieved in the same period of previous year.

Pioneer Cement earned a profit of RO 1.15 million this year, as against RO 1.08 million in the same period of previous year, in spite of the severe competition faced by the company in the UAE and Oman markets.

Group sales climbed 3 per cent 1,020,907 tonnes of Cement during the first quarter of 2013, against 996,560 tonnes in the corresponding period of last year.

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