Oman Cement plans to invest in a new cement mill with a design capacity of 150 metric tons per hour.
Tender documents for consultancy services as well as the Engineering-Procurement-Construction (EPC) contract, are due to be floated by the second quarter of this year, Abdullah Abbas Ahmed, Chairman of the Board of Directors, stated in the company's quarterly financial report. The announcement comes on the heels of the completion of Oman Cement's third clinker line, which will boost the company's total clinker production capacity by 4,000 tons per day. Trial production and commissioning of the new facility, built with an investment of RO 62.7 million, is underway, with performance guarantee tests due to be carried out during the current quarter.
Last month, the company signed contracts for a capacity upgrade of Kiln 1 along with the refurbishment of the kiln's pollution control systems. Both upgrades, entailing an investment of RO 14.27 million, will be completed by April 2012.
While the ongoing commissioning of the third kiln will contribute to major cost reductions and improvements in the company's profit margins, cement inflows from neighbouring countries will continue to hurt profitability, the Chairman warned in the Board of Directors Report.
Meanwhile, Oman Cement posted a 42 per cent slump in profit after tax, which declined to RO 4.151 million for the quarter ending March 31, 2011, as against earnings of RO 7.118 million during the corresponding quarter of 2010.
The lower profit was attributed to the "decrease in the selling prices of cement to face the competition". Adverse movements in the fair value of investments due to stock market fluctuations also impacted on the company's profits, the report said.
Cement sales during the quarter under review decreased marginally by 1.62 per cent to 490,865 metric tons as against sales of 495,958 metric tons during the same period last year. In value terms, revenues were lower by 17.74 per cent at RO 12.860 million during Q1 2011 as against earnings of RO 15.633 million during the corresponding period last year.
Commenting on the future outlook for cement sales, the Chairman stated: "The demand for cement continues to be good in view of government spending on infrastructure projects. Inflow of cement from neighbouring countries at reduced prices is posing a threat due to the excess supply position there. Despite the strong competition locally and also from neighbouring countries, the company maintains a sizeable market share in Oman."
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