TAIWAN: Taiwan’s Cement, Steel Firms to Benefit from Public Works

Taiwan’s cement, premixed concrete, construction and steel sectors stand to benefit from faster implementation of massive public work projects budgeted at NT$200 billion, which spells relief considering these sectors have suffered relative to last year in the first three quarters due to the tepid global economy. 

The launching of major public work projects beginning the end of this year or in the first half of 2012 will drive sales for the slumping industries of cement, premixed concrete, construction and steel in the next three or four years. 

The Taiwan Steel and Iron Industries Association confirmed that the major public work projects will boost demand for steel rebar, steel plates, steel structure, light steel, hot-dip galvanized steel coil and coated steel. 

The biggest beneficiaries of the public work projects will include first-tier firms as Taiwan Cement Corp., Asia Cement Corp., China Steel Corp., Tung Ho Steel Corp., Feng Hsin Steel Corp., Goldsun Development & Construction Corp., BES Engineering Corp. and KSECO Corp. 

Based on experience, Taiwan Cement said 7% of budgets for major public works will go to procurement of cement and premixed concrete, which will help Taiwan Cement to see 6% annual sales growth in 2012. 

With a 52% year-on-year sales decline in the first 10 months, KSECO has recently bid for major public works projects, believing its earnings potential to be markedly raised in the next three to four years.

CHINA: National Cement Prices Down 1.1%

The average price of cement nationwide fell 1.12 percent last week, dragged down by the price declines in Henan and Guizhou provinces, reports Shanghai Securities News, citing industry portal, Digital Cement.

Heilongjiang and Jilin provinces had published winter cement prices last week, and Harbin P.C 32.5 cement was priced at 400 yuan per ton.

According to Wang Xiaoliang, an analyst with Digital Cement, many cement makers had already halted production, and were waiting for cement prices to rise at the beginning of 2012 on expectations of higher demand.

The average price of cement in Guiyang fell by another 30 yuan per ton last week as a result of oversupply and intense competition among cement makers.

During the same period, the average price of cement in Henan province declined 20-30 yuan per ton after price increases in recent weeks. This was attributed to weak downstream demand, and the relatively large inventory of cement producers.

Cement prices rose last week in Hefei and Chaohu in Anhui province, with prices up by about 20-30 yuan per ton.

SRI LANKA: Sri Lanka port gets U$15mn cement plant

Sri Lanka has approved a 15.6 million US dollar cement plant by Pakistan's Thatta cement to be built on an industrial zone next to Hambantota port in the island's south, an official said.

Sri Lanka Ports Authority chairman said the cabinet of ministers had approved the plant this week.

The industrial zone had already attracted a chemical plant from Singapore's Peak Energy (Pvt) Ltd which will invest 434.5 million US dollars which will build a PET resin plant and a sugar refinery by Sri Renuka Sugar of India which will invest 220 million dollars.

A fertilizer plant connected to Sri Lanka's Hayleys Advantis group will also invest 7.2 million dollars.

Wickrema said there were also several smaller projects in the pipeline amounting to around 100 million dollars.

PAKISTAN: Pakistani company gets contract for cement plant at H'tota

A Pakistani company has been awarded a contract to set up a cement grinding plant at the Hambantota Port on a proposal made by President Mahinda Rajapaksa to the cabinet.

M/s Thatta Cement Co Pakistan has been awarded the contract.

Earlier three other business ventures were given approval.

They are M/s. Shree Renuka Sugar Ltd, Inida for the operation of a sugar refinery plant, Peak Energy (Pvt) Ltd, Singapore for the operation of a Petro Chemicals Plants and Halyes Advantis Ltd for a fertilizer storage, processing and bagging plant.

EEUU: Buzzi Unicem holds meeting on hazardous waste burning permit

Buzzi Unicem will invest more than $1.5 million in upgrades to its Cape Girardeau cement plant if changes to its hazardous waste permit are approved.

During an informational meeting Wednesday, company representatives along with Missouri Department of Natural Resources and EPA officials answered questions about the company's plans to burn more hazardous waste in the future. About 25 people attended the meeting.

For about 20 years, the company, formerly known as Lonestar Industries, has used hazardous waste -- including solvents, used paints and inks -- as fuel to heat its kiln.

There are two combustion chambers within its kiln and hazardous waste is used exclusively in one of those chambers. The other chamber uses coal, but the company would like to begin testing the use of hazardous waste in that chamber, called a calciner, as well.

"Coal is very expensive. It's a very energy-intensive process. We have to heat materials to 2,700 degrees Fahrenheit, and it takes a lot of coal and energy to do that. If we were not burning hazardous waste, we would be burning close to 500 tons per year of coal. Right now, we're able to replace just over 50 percent of that with hazardous waste. By expanding, that will allow us to burn even less coal," said Paul Schell, environmental engineer at Buzzi Unicem.

By reducing the amount of coal it burns even more, the company will save money, allowing it to operate more cost effectively and preserve jobs, Schell said. It would require an initial investment to convert its facility to use more hazardous waste fuel. About $1 million in upgrades will be required to modify the kiln to burn more hazardous waste, he said. The company also plans to spend about $500,000 to add a railcar unloading facility with two new wash and storage tanks to allow for cleaning of the railcars. Currently, all of its hazardous waste fuel is delivered by truck. It comes to Buzzi from off-site manufacturers or third-party hazardous waste blenders.

There are many benefits to using hazardous waste, Schell said. Its emissions are similar to coal and even less than coal on some specific pollutants including sulfur dioxide and nitrogen oxide, he said.

"You're conserving natural resources by not having to burn that coal. You're also providing a safe and effective way to dispose of the hazardous waste that typically would just go to an incinerator and be burned with no real product, just burned for the sake of burning it. We can capture the energy in those things and keep it out of incinerators and out of landfills," Schell said.

Robert Adams, who lives not far from Buzzi on Highway 74, said when he first heard about the company's hazardous waste permit modification request he was concerned, but after attending the meeting is comfortable with the proposal.

"When you hear hazardous waste your mind goes all sorts of directions," said Adams. "You need to find out. It's your duty to do so. I see nothing here that's of any bother. Those are things you've got in your own house. I understand what they're doing."

Jeff Timmerman, who lives not far from Buzzi, said he believed the hazardous wastes the company is burning are good fuel choices.

Most of the people who attended the informational meeting were representatives of local government, the chamber of commerce and area economic development agencies.

A copy of the company's permit modification request can be found at the Cape Girardeau Public Library or by visitingdnr.mo.gov/env/hwp/permits/mod981127319/information.htm. The DNR will accept public comments in writing or online through Dec. 30 on the request. After those are reviewed, a draft permit will be put out for a second round of public comments. If requested, a public hearing will be held at that time, before a final decision on whether or not to issue the permit, said Darleen Groner, operating facilities unit chief with DNR.

The process Buzzi is proposing isn't new to Missouri. Continental Cement in Hannibal, Mo., has used the same process successfully for many years, Groner said.

VIETNAM: Experts lament huge subsidies for steel, cement

Many experts are urging the government to revise the huge subsidies for coal and power prices for steel and cement manufacturers who have failed to make good use of them.

During his Q&A session at the National Assembly meeting last week, Minister of Finance Vuong Dinh Hue said the power sector last year granted subsidies worth as much as VND2.54 trillion (US$129.1 million) to steel and cement manufacturing industries.

Hue said that the two highly power-consuming industries also enjoyed another incentive which allowed them to buy coal at up to 63% lower than export prices.

The two sectors had consumed more than 11% of Vietnam’s total power production in 2010 at the price of only VND914 a kWh compared to the cost price of VND1,180 a kWh, Hue said, citing audit results and figures from the Ministry of Industry and Trade.

“FDI steel manufacturers have also benefited VND506 billion from the total VND2.54 trillion subsidies granted by the power sector last year,” he said.

He said many foreign businesses had taken advantage of the preferential power price to invest in steel manufacturing, making Vietnam a hub for exporting steel at low costs.

“Our price management policies should aim at curbing this issue,” Hue said.

Also at the NA meeting, Nguyen Huu Quang, permanent member of the NA Committee of Finance and Budget, said he was concerned that steel and coal exports should continue to be encouraged while products’ cost prices did not reflect real input costs.

“It’s obvious that the steel and cement sectors have benefited from the cheap power and coal prices,” Quang was quoted by the Saigon Times Daily as saying.

He said Vietnam currently had to buy power from China at around VND1,400 a kWh, but sold to the cement manufacturing industry at even less than VND1,000 a kWh.

Meanwhile, the cement industry could buy coal at a mere VND1.7 million a ton while the export price was nearly VND3 million, he said.

“Only underprivileged households or low-income earners are eligible for the power preferential price policy to ensure social security,” he said.

He said cement and clinker exports should be limited since export prices were lower than the rate in the domestic market.

“This will benefit only cement manufacturers while those really need government subsidies receive nothing.”

Quang thus demanded that the input costs of the cement and steel making industries should be gradually and appropriately calculated to avoid affecting other related manufacturing sectors.

Earlier in June, the Ministry of Finance proposed increasing the steel exporting tariff to 3%, but the Vietnam Steel Association only agreed to buy power at a higher price rather than pay a higher tax.

Why are subsidies yet to be adjusted?

Regarding the question why the subsidized power and coal prices for the steel and cement industries have yet to be recalculated, Hue told Saigon Times that it was not a simple task and many things should be taken into consideration.

Economic expert Pham Chi Lan said a change would face a lot of hindrances since it was “a matter of history.”

In the last decade, Vietnam has prioritized the development of heavy industries including steel and cement by granting them many incentives.

With the mindset of developing at all costs for the last dozens of years, the country finds it hard to adjust the preferential policies even when certain industries have lost in competition.

“There is a series of obstacles when it comes to the interests of such preferential sectors,” Lan said.

MEXICO: Holcim gana terreno a Cemex en México

La empresa regiomontana sube sus precios 5%, la suiza sólo 0.3%.

Mientras las ventas del principal productor de cemento en el país, Cemex, mostrostraron un crecimiento reducido, la firma suiza Holcim logró reportar tasas más elevadas y mantener una política de precios más equilibrada.

De acuerdo con información financiera de Holcim, durante los primeros nueve meses de este año, el volumen de venta de cemento creció 2.5 por ciento en México, con lo cual logró superar a Cemex, que reportó un incremento de apenas 1 por ciento.

Holcim que se ostenta como la segunda mayor productora de cemento en el mundo, informó que sus ventas por volumen de productos agregados se elevaron 29.9 por ciento al cierre de septiembre de 2011; en contraste, Cemex registró un crecimiento de sólo 3 por ciento.

Según la cementera regiomontana, aun cuando los sectores de infraestructura industrial y comercial han mantenido una tendencia positiva, esto no ha sido suficiente para impulsar la demanda de cemento en el país.

Ante el bajo dinamismo de los volúmenes de venta y las presiones por el alza en costos de operación como la energía, la política de precios de Cemex ha sido aplicar incrementos en la cotización de sus principales productos.

En los primeros nueve meses del año, la cementera mexicana aumentó 5 y 19 por ciento los precios del cemento y los agregados, respectivamente.

Por el contrario, Holcim, el segundo mayor productor de cemento en México, ha mantenido una estrategia de precios más conservadora, al incrementar 0.3 y 4.7 el importe del cemento y los agregados, respectivamente.

De acuerdo con datos del sector, Cemex posee casi 45 por ciento del mercado nacional de cemento, seguido de Holcim-Apasco, con una capacidad instalada de 12.6 millones de toneladas, que representan 22 por ciento de participación.

Los planes de la cementera suiza es que hacia 2013 su capacidad instalada en el país alcance 30 millones de toneladas.

Recientemente, esta empresa anunció una inversión de 400 millones de dólares en la construcción de su séptima planta de cemento en México, ubicada en Sonora.

Por su parte, Cemex continuará con su estrategia de ajuste de precios para compensar el encarecimiento de la energía y otras materias primas, en tanto espera la reactivación del sector de la construcción, la vivienda y los proyectos de infraestructura.

“Este año llevamos a cabo incrementos en los precios de nuestros tres principales productos para compensar las alzas en costos; desafortunadamente no fuimos exitosos y perdimos volumen en algunos mercados, pero ahora implementaremos una nueva estrategia”, apuntó el vicepresidente de planeación y finanzas de Cemex, Fernando González.

Impugnarán cobro de impuestos

Por otra parte, Cemex indicó el pasado viernes que impugnará el cobro de créditos fiscales que las autoridades del país le reclaman, por alrededor de 142 millones de dólares de impuestos generados en 2004.

Cemex, una de las mayores cementeras del mundo, indicó en un comunicado que fue notificada de los créditos fiscales que adeudan dos de sus subsidiarias por el impuesto sobre la renta generados por inversiones realizadas en el extranjero.

“Si (la impugnación) se resolviera de manera adversa después de que todos los recursos hayan sido agotados, estos créditos fiscales pudieran tener un efecto adverso en el flujo de efectivo, condición financiera y utilidad neta de Cemex”, dijo la cementera en un comunicado.

La firma, que arrastra una deuda de más de 18 mil millones de dólares, está luchando por cumplir con sus obligaciones financieras en medio de una desaceleración económica global, que le ha impedido generar el suficiente efectivo para reducir sustancialmente sus pasivos.

HONDURAS: Sube en 10% el consumo de cemento en Honduras

El consumo de cemento en el país se incrementó este año un 10 por ciento en relación a 2010, derivado de mejoras de vivienda efectuadas en el sector rural con los buenos precios del café y el mejor uso de remesas familiares provenientes de Estados Unidos.

Los cafetaleros han invertido parte de sus ingresos en mejorar sus viviendas y construir nuevas.

La demanda en el mercado nacional asciende a 1.5 millones de toneladas de ese producto de la construcción, según el director comercial de la Industria Cementera Honduras (Lafarge Incehsa), Darío Mencía.

“Lo que está dando el crecimiento es el mercado hormiga, los precios del café y las remesas porque no existen muchos proyectos tan grandes”, expresó Mencía, para luego referir que a nivel de su empresa las ventas cerrarán con unas 850,000 toneladas.

Para 2012, los cementeros están considerando un incremento en el consumo por el orden del 5 por ciento, siempre y cuando se genere inversión pública y privada.

Informes del Banco Central de Honduras (BCH) establecen que la industria de la construcción presentó una variación negativa de 2.8 por ciento a agosto pasado, a raíz de la menor cantidad de metros cuadrados construidos, principalmente en el destino residencial.

La construcción privada mostró una menor caída respecto al mismo período del año anterior, impulsada principalmente por la destinada a la actividad comercial, la cual creció en 69.2 por ciento, siempre a agosto de 2011; destino que ocupa el segundo lugar en importancia dentro de la actividad edificadora después del residencial.

Lo anterior, producto del avance en la ejecución de proyectos de infraestructura para la actividad comercial (destacándose las construcciones del City Mall y el Centro Comercial Premier en el Distrito Central).

La construcción de tipo residencial e industrial decreció en 14.7 por ciento y 95 por ciento, en su orden, comportamiento vinculado con la menor inversión en este tipo de proyectos.

En esa tendencia por ciudades, la construcción en San Pedro Sula y el Distrito Central disminuyeron en 8.5 por ciento y 2 por ciento, respectivamente; en tanto, la construcción en las ciudades de Tela, Choluteca, Villanueva y Choloma, presentaron de forma conjunta un leve aumento de 0.9 por ciento.(WH).

COLOMBIA: Alza en despachos y producción de cemento

En octubre pasado, la producción de cemento en Colombia ascendió a 948,9 mil toneladas, 13,8 por ciento más a la de octubre del año pasado.

Durante el mismo mes se despacharon 887,7 mil toneladas de cemento, lo que también representó un incremento de 11,6 por ciento.

Según el Dane, el alza anual en los despachos fue ocasionado, principalmente, por lo entregado a los canales de comercialización (7,9 por ciento) y a las concreteras (15,1 por ciento) que aportaron en conjunto 7,8 puntos porcentuales a la variación anual.

Por destinos, 18 de los 21 departamentos analizados mostraron aumentos, especialmente Casanare (58,3 por ciento), Córdoba (48,1), Nariño (39 por ciento) y Cesar (38,6 por ciento).

En lo corrido del año, a octubre, la producción y los despachos de cemento también crecieron 14,4 y 13,9 por ciento, respectivamente, respecto al mismo lapso de tiempo del 2010. Esta vez Cesar (con 44,3 por ciento), Huila (con 35,7) y Casanare (con 34,1 por ciento) fueron los departamentos más dinámicos.

El dato de los doce meses hasta octubre pasado siguen la misma tendencia: alza de 13 por ciento en la producción y de 13,3 por ciento en los despachos, respecto al periodo comprendido entre noviembre del 2009 y octubre del 2010.

CHINA: China to eliminate outdated cement capacity

China aims to eliminate 250 million tons of outdated production capacity in the cement industry in the 2011-2015 period, the Ministry of Industry and Information Technology (MIIT) said Tuesday.

The country's top 10 cement companies will see their combined output account for 35 percent of the national total by 2015, up from 25 percent in 2010, according to the 12th Five-Year Plan for the building material industry released by the MIIT.

Cement producers are expected to cut emissions of nitrogen oxides and sulfur dioxide by 10 percent and 8 percent respectively in the period, said the ministry.

During the five-year period, emissions of carbon dioxide per unit of industrial added value will be reduced by 17 percent, according to the plan.

The ministry noted that the industrial added value of cement enterprises will expand at an annual average rate of more than 10 percent from 2011 to 2015.

It forecasts the domestic market demand for cement to rise by 3-4 percent annually on average to reach 2.2 billion tons in 2015, a slower pace than the current level as the country increases efforts to make its economy less reliant on fix-asset investment and more on technologies and consumption.

China's cement output rose 18 percent year-on-year to 1.7 billion tons in the first 10 months of the year, according to official data.

INDIA: A short-term bounce for the cement sector

Amid the gloom and paranoia in equity markets, the cement sector seems to be surprising positively. First, frontline cement firms led strong double-digit profit growth for the September quarter over the year-ago period. And now, a pan-India rise in retail cement prices is good news for the current quarter.

The three large-cap stocks— ACC Ltd, Ambuja Cements Ltd and UltraTech Cement Ltd—have outperformed the benchmark Sensex of BSE over the past six months. But the last few trading sessions saw these shares tumble as the sector outlook remains uncertain.

Photo: Bloomberg

On the one hand, cement prices are on firm ground. Last week, a report byEmkay Global Financial Services Ltd said, “All-India average cement prices up by 3.3% month-on-month (R

s.

9 per bag).” The eastern and northern regions posted a sharp hike followed by the western region, and prices remained firm in the southern region, despite the monsoon.

On the other hand, macroeconomic data indicates a slowdown in both consumption-led demand and investment. According to the Centre for Monitoring Indian Economy, the new projects announced during the September quarter have contracted by 50% year-on-year. The obvious fallout of this lacklustre activity is reflected in poor growth in demand offtake for cement at around 3-4% during April-October compared with the year-ago period.

Naveen Kumar Saini/Mint

The moot question, therefore, is with the key cement consumers such as infrastructure, construction and real estate in a state of limbo, will demand growth for cement slow? In which case, will the present rise in cement prices sustain?

The most likely scenario is oversupply for the next 12-18 months. The increase in cement prices and net profit of most firms during the September quarter are perhaps on a relatively low base of the year-ago period.

That said, costs affecting the sector adversely are on the rise. Compared with the preceding quarter, both average realizations per tonne and operating profit per tonne declined. Operating profit was hit by higher costs, the surprise elements being raw materials like fly-ash and gypsum, although energy and freight costs increases were in line with expectations.

Analysts expect that cost-push factors such as higher imported coal prices due to the rupee depreciation and higher railway surcharge could hit profits even in the December quarter.

Though, it’s possible that the southern firms—India Cements Ltd and Madras Cements Ltd—could register better operating profit margins in the current quarter, as in the preceding quarter, if prices hold firm and despatches improve. So far, they have been able to maintain production discipline to keep prices up and maintain profitability.

From an investment perspective, the sector as a whole would be attractive only when the domestic investment cycle displays a sustained turnaround.

SAUDI ARABIA: Saudi corporate profits rise 24.6% to SR73.4 billion

JEDDAH: The Saudi corporate sector is continuing to thrive due to the relative stability of the Kingdom, its strong fundamentals and higher oil prices despite the recent wave of global political and economic instability,

Aggregate net profits of the Saudi corporate sector reached SR73.4 billion by the end of first 9 months of 2011, up by 24.6 percent YoY.

Meanwhile, total net profitability for Saudi listed firms by the end of Q3, 2011 increased by 22.1 percent, reaching SR25.8, the Kuwait-based Global Investment House (Global) said in a new report received here on Monday.

The report covers the results of 136 companies that announced their financial results, and whose financial year end on Dec. 31.

Companies, which did not have a comparable period, were excluded from this analysis.

Of the 136 companies, the Global report said 72 companies managed to improve their bottom lines in the first nine months, including 7 companies that swung from losses in the first nine months of 2010 to gains by the end of first nine months this year. Meanwhile, 36 companies reported decreased profitably, and 28 companies reported loss.

Sector profitability

By sector, nine out of the 15 sectors of the market managed to enhance their bottom lines by the end of the first nine months, compared to the corresponding period of the previous year, while 6 sectors reported a decline in their net profit. As for the Saudi listed companies’ results by the end of Q3, 2011, 10 out the 15 sectors reported better results, compared to the corresponding period of the previous year.

Petrochemical sector

Net income of petrochemical industries sector grew by 55.3 percent by the end of the nine months of 2011, according to the Global report.

In terms of quarterly performance, the sector posted an increase in its net profit for Q3, 2011 by 66.5 percent compared to Q3, 2010.

Meanwhile, QoQ profitability marginally increased by 5.0 percent compared to Q2, 2011.

This was largely due to higher product prices, supported by elevated production, particularly from Yanbu National Petrochemical Company (YANSAB) and Saudi International Petrochemical Company (Sipchem).

Despite the weakening of the global economy in Q3, 2011, there appears to have been little impact on volumes sold.

Within the sector, Saudi Basic Industries Corp.’s (SABIC’s), the biggest company in terms of market capitalization in the Middle East, posted another record profit in Q3 amounting to SR8.2 billion (+53.7 percent), which was a natural result of the continued growth experienced over the last two quarters of the same year.

By the end of nine months, SABIC’s net profit stood at SR24 billion, up by 52 percent.

SABIC’s affiliate YANSAB posted a significant rise of 132.5 percent in net profit to SR827.9 million in Q3. The strong performance followed a strong performance in Q2 when the company’s profitability rose by 91.8 percent, the Global report said.

However, on a QoQ basis, net profit declined by 14.1 percent due to a decline in product prices compared to the previous quarter.

Saudi Arabian Fertilizer Company (SAFCO) registered a considerable growth in net income during Q3 (+100.1 percent), on the back of handsome increase in product prices.

Net income reported during nine months was SR2.8 billion compared to SR2.2 billion in the same period last year, an increase of 28.3 percent.

The most impressive result, however, was posted by Methanol Chemicals Company (Chemanol) which achieved net profit amounting to SR46.89 million for nine months compared to SR2.04 million in nine months of 2010, an increase of 2,198.5 percent.

As for the company’s performance during Q3, it posted SR26.7 million in net profit compared to a loss in the amount of SR15.6 million in Q3, 2010.

Banking sector

Most Saudi lenders posted higher earnings in Q3 due to lower provisions and higher income from lending activities.

The banking and financial services sector posted a 29.3 percent jump in Q3 net profit, with 10 out of the 11 listed banks posting higher net profit.

Similarly, nine-month net profit increased by 16.9 percent, reaching SR19.6 billion.

Al-Rajhi Bank reported very strong set of numbers with its Q3 profitability increasing by 18 percent.

The strong results have come on account of 48 percent and 14 percent jump in non-commission income, said the Global report.

Although, deposit growth had been stagnant, lending for the quarter has been quite strong with total financing recording a jump of 5.1 percent. As a result, total financing/total customer deposit ratio has improved to 80.7 percent as compared to 77 percent in Q2.

For the first nine months of the year, Al-Rajhi’s net profit stood at SR5.5 billion, up by 7.4 percent compared to the corresponding period of the previous year.

Riyad Bank’s net income posted an increase of 15.1 percent. For the third quarter, the bank’s net profit increased by 30 percent, as it stood at SR 611 million. The strong result was driven by a growth in non-commission income and a drop in provisioning this quarter compared to the high provisioning during Q3, 2010. While non-commission income has gone up by 16.2 percent to reach SR509 million, net special commission income remained almost unchanged at SR1.06 billion.

Bank Albilad recorded a significant increase in Q3 net income by 3,462.5 percent, up from SR2.4 million in Q3, 2010 to SR85.5 million in Q3, which coupled with improved H1, 2011 results, led to 9-month profitability increase of 153.5 percent to SR222.6 million.

Telecom sector

Aggregate net profit of the telecom sector declined by 9.3 percent by the end of nine months, as it declined from SR8.1 billion in same period of 2010 to SR7.3 billion in nine months of this year.

Saudi Telecom Co. (STC) net profit plunged 53 percent in Q3 to SR1.6 billion, as foreign exchange currency fluctuation loss of SR780 million and provision of SR134 million with regards to additional financial costs arising as a result of merging the two systems of Public Pension Fund and General Organization for Social Insurance. If you exclude these losses, the net profit comes to SR2.5 billion. The significant decline of profitability was also due to the one off gain of SR728 million registered in Q3, 2010 on account of sale of towers to AIRCEL in India.

On the other hand, revenue grew by 6 percent to SR14 billion.

The Global report also said that Etihad Etisalat (Mobily) Q3 net profit grew marginally by 7.6 percent to reach SR1.2 billion, due to lower sales of low-margin smart phones from the company’s own outlets. Sales revenue increased by 16.0 percent in Q3 which is lower than the sales growth of 25 percent in Q1, 2011 and 29.1 percent in Q2, 2011. The company reduced its sales of low margin smart-phones to enhance EBITDA margins, which increased to 39.0 percent in Q3 from 34 percent in Q2. For nine months, the company’s net profit increased by 23 percent, reaching SR3.4 billion.

Saudi Zain’s Q3 loss narrowed by 11 percent to SR484 million from SR544 million a year earlier as it added more subscribers. Loss in the first nine month period narrowed over 20 percent to SR1.5 billion from SR1.84 million in the same period last year.

Energy and utilities sector

Both utilities companies posted subdued results by the end of nine months, with the sector’s aggregate net profit marginally increasing from SR2.7 billion in nine months of 2010 to SR2.8 billion in nine months of 2011, up by 5.3 percent. In the meantime, the sector’s Q3 net profits retreated by 6.1 percent.

Saudi Electricity Company’s (SEC) Q3 fell by 6.1 percent at SR2.2 billion, due to higher costs of consumption and purchased energy. The company’s net profit increased by 5.1 percent to SR2.7 billion in nine months.

Meanwhile, National Gas and Industrialization Company’s Q3 stood at SR27 million (-0.07 percent), while the company’s net profit grew by 11.9 percent to SR72.3 million in nine months.

Cement sector

The cement sector continued to thrive in 2011 due to the thriving demand of cement in the Kingdom, according to the Global report.

Listed cement companies had good results by the end of nine months, with 8 out of the 9 listed companies enhancing their bottom lines, including the newly listed Jouf Cement Company, which managed to turn from a net loss of SR1.9 million in nine months of 2010 to profits of SR68.5 million in nine months of 2011.

Meanwhile, Arabian Cement Company witnessed a strong net profit growth of 28.4 percent to SR104.9 million in Q3, 2011.

The company cited increase in sales and production from its Rabigh plant as the major reason behind the surge in profitability on a YoY basis.

However, the company has incurred losses on its operation of the Qatranah cement plant in Jordan to the tune of JOD5.6 million since the start of the commercial operations which has held back the performance of the company to a certain extent. The company is facing high fuel costs and intense competition in Jordan. On a QoQ basis, net profit declined by 6.1 percent due to Ramadan and Eid falling in this quarter. Net profit in nine months increased by 36 percent to SR332.7 million.

In the meantime, Saudi Cement Company net profit increased by 39.2 percent YoY in Q3 to SR195.3 million.

The company has posted good results in the last three quarters due to higher than expected efficiency savings and cement dispatches.

The new production lines that came online in April 2009 had an apparent effect on cost of sales per ton which declined to SR101.1 in Q3 compared to SR116.9 in Q3, 2010. These efficiency gains have pushed up gross margins to 57.9 percent in Q3, 2011 compared to 50.1 percent in Q3, 2010. The company’s net profit stood at SR619.9 million in nine months, up by 22.2 percent YoY.

Real estate sector

The year 2011 has been a year of groundbreaking decisions for the Saudi real estate sector.

With the mortgage law approved, the new Ministry of Housing in place and SR250 billion allocated to build 500,000 new housing units; the government is determined to back the housing sector. Aggregate net profit of the Real estate development sector stood at SR1.2 billion, up by 30.7 percent YoY.

Within the sector, Dar Alarkan 3Q, 2011 net profit came in at SR227.5 million down by 21.4 percent YoY and 23.6 percent QoQ. Net profit for nine months stood at SR798.3 million, down by 29.1 percent YoY.

Revenues for nine months came in at SR2.5 billion down 22 percent from SR3.2 billion in the nine months of 2010 reflecting the decline in sales throughout all three quarters since the beginning of the year.

Emaar Economic City’s (EEC) net income came at SR80.2 million in nine months compared to a net loss of SR377.5 million in the comparable period.

For Q3, the company’s net profit stood at SR6.2 million, compared to a net loss of SR195.6 million in Q3, 2010. EEC’s revenues were boosted by land sales from the remaining Esmiralda plots. Financial charges are starting to weigh on EEC’s bottom line with net finance costs of SR19.2 million in Q3, 2011 compared to a net gain of SR390,000 in Q3, 2010. As of Q3, 2011, EEC had a cash and short term deposits balance of SR5 billion indicating that the money received from the Ministry of Finance loan has not yet been channeled through to contractors, which indicates that minimal construction progress has been achieved during the quarter.

Looking forward, the SR5 billion loan to revitalize the pace of construction in King Abdullah Economic City (KAEC) as of Q4, 2011 although EEC’s earning power, in the short term, will remain solely reliant on land sales along with very slim contributions from apartment sales and the industrial valley.

CHINA: Prosperity Minerals sees increase in revenues and profits

Chinese iron ore trading and cement businessProsperity Minerals (LON:PMHL) boosted its first-half revenues by 17 per cent to US$507.8 million while producing a pre-tax profit of US$8.4 million (H1 2011: US$2.5 million loss), the firm said today.

Reporting its interim results for the six months to September 30, Prosperity said that while the firm increased the amount of iron ore shipped during the first half to 2.8 million tonnes, from 2.7 million tonnes in H1 2011, its revenue increase was also due to higher average selling prices. However, the operating profit per tonne came in lower at US$3.6 million (H1 2011: US$6.6 million) because, the firm said, margins continue to come under pressure due to the abandonment of the industry’s annual price fixing and greater direct trade between miners and steel mills.

Prosperity’s cement operations produced an attributable profit of US$8.7 million, compared to a loss of US$0.6 million in H1 2011. The firm said that its 33 per cent-owned Anhui Chaodong Cement business produced and sold more cement and clinker as demand in its region was strong and average selling prices higher. The 16.1 per cent-owned TCC Liaoyang business produced an operating profit of US$0.2 million, but it ended up contributing a loss of US$1.9 million (H1 2011: US$0.04 million) due to as loss on demand disposal of US$2.1 million caused by a share issuance in August.

Prosperity said that its real estate development projects business made a loss of US$3.5 million, compared to a US$0.6 million profit in H1 2011. 

“I remain confident that the company will continue to trade well in both iron ore and real estate despite challenging market conditions brought about by an unsettled iron ore market and Chinese government policy, together with continuing global economic uncertainties,” said David Wong, Prosperity’s chairman and chief executive officer.

Prosperity’s share price was down 1.8 per cent at 82 pence in early trading today.

PARAGUAY: Paraguay pide asistencia técnica a Irán para construcción de planta cementera

El portal iraní Teheran Times se hace eco de una reunión entre el presidente de la Cámara de Diputados, Víctor Bogado, con Hojjatollah Soltani, embajador concurrente de Irán en nuestro país. La información afirma que el titular de la Cámara Baja solicitó asistencia técnica al país asiático para la construcción de una planta cementera en Paraguay.

“En la reunión, Bogado destacó la notable capacidad de Irán en construir diferentes tipos de plantas y fábricas, así como sus logros y progresos en varios campos industriales, y pidió ayuda a Teherán para que ayude a Asunción en la construcción de una planta cementera en el país sudamericano”, indica la nota fechada el domingo 27 de noviembre. 

Bogado explicó durante la reunión que una compañía privada es dueña de minas para producir cemento suficiente para dos siglos, pero que necesita la experiencia de Irán para construir una planta cementera. El titular del Congreso dijo que nuestro país tiene algunas fábricas pequeñas para la producción, pero que todavía importa cemento de otros países. 

El portal iraní destaca la presencia reciente de ese país a nivel latinoamericano, especialmente en lo referente al comercio y la producción. Recuerda además el fortalecimiento de lazos con Venezuela, Bolivia y Cuba.

Teheran Times recuerda una conversación entre Mahmud Ahmadinejad, presidente de Irán, y Fernando Lugo en marzo pasado, donde quedaron en que desarrollarían la cooperación entre ambos países. 

La Industria Nacional del Cemento no puede abastecer la demanda local por constantes fallasen el clínker y se espera una millonaria inversión para aumentar la producción. El ente atraviesa también por una grave crisis financiera.