UAE: RAK Cement buys back 3.8% to subscribed capital

Ras Al Khaimah Cement Co said on Wednesday it has purchased 3.816 per cent of the stake or 30 million shares at Dh0.83 per share.

The purchase was done through Al Ramz Capital, the company said in a statement posted on Abu Dhabi Securities Exchange’s website.

RAK Cement is capable of producing 960,000 tonnes of clinker and 1 million tonnes of cement per year, and employs 150 employees, according to the website. The plant is connected to a terminal inside the adjacent Saqr Port, which has the capacity to load ships up to 40,000 deadweight tonnage (dwt).

UAE: National Cement to negotiate with 4 banks to borrow LE250 m

National Cement (NCEM) intends to negotiate for new financing worth LE250 million to use for the financial obligations of the new development plan, AlMal Newspaper reported on Wednesday.

Sources said the company is requesting funding offers from 4 banks; CIB (COMI), Banque Misr, QNB AlAhli (QNBA), and Emirates NDB, adding that each bank will provide a separate financing offer and that it is possible to form an consortium.

The company's future projects includes converting 2 cement mills to a closed circuit to produce cement with 42.5 standards for export, according to its website.

UAE: RAK cement factory closed for one month

The Ministry of Water and Environment has closed a cement factory for one month in Khor Khuweir in Ras Al Khaimah.

The factory violated rules under Cabinet Resolution No 24 of 2011 that regulates activities in the cement industry.

Ghanem Al Shamsi, from the ministry, said the decision came after specialists from the external audit department visited the factory’s facilities.

The visit was part of efforts to evaluate efficiency in implementing federal legislation to enhance environmental sustainability. Auditors reported a number of violations.

Such visits are part of the ministry’s strategy to improve environmental performance and promote environmental sustainability.

UAE: UAE's oldest cement firm improves profits

nion Cement reported a turnaround in its profitability despite flat sales in the first half of the year.

The company said that net profit for the first nine months grew to $12.2m, compared with a loss of $7.3m during the same period last year.

This was achieved despite the fact that sales dipped slightly to $123.9m.

In a statement to the Abu Dhabi Securities Exchange, the company's general manager Yasir Ahmed bin Humaid Al Qassimi attributed the increase in profit to the improvement of selling prices for cement and clinker.

UAE: UAE cement company results

A series of results has been released by cement producers in the United Arab Emirates. Sharjah Cement has announced a US$3.5m net profit for the first half of 2012, an improvement from a US$0.6m loss in the first six months of 2011. Its revenue was up by 14.5% to US$87.5m from US$76.4m.

Meanwhile, Union Cement posted a profit of US$5.6m, which, like Sharjah, was an improvement from a loss. It lost US$4.1m in the first half of 2011. Union's sales revenue was down marginally year-on-year to US$88.3m, a drop of 0.2%.

Gulf Cement also made an improvement year-on-year, increasing its revenue by 14.9% from US$35.4m to US$40.7m. However, the company went from a profit of US$3.64m to a US$0.78m loss.

UAE: Business Opportunities and Future Growth Potential to 2016

Synopsis

The report provides market analysis, information and insights into the UAE cement industry including:• In-depth analysis of the UAE cement industry • A detailed analysis of market attractiveness, covering the key trends, drivers and regulatory frameworks• Detailed market size figures for a period of ten years (2007–2016) • Detailed imports and exports figures for a period of five years (2007–2011) • Description and analysis of the competitive landscape and the industry structure • Analysis of market entry, growth and operational strategies of key players • Profiles of the major companies • Details of current and future production capacity

Summary

The UAE is ranked as the second-largest producer of cement in the Middle East and North Africa region (MENA), only behind Saudi Arabia. The continued slowdown in the UAE property and construction sector continues to haunt cement companies in the country. This led to an under utilization of capacity and a fall in prices. Production capacity is more than two times the domestic demand so companies are now looking at export markets in the MENA region. Margins are shrinking further as operating costs soar. However, the long-term prospects for the UAE cement industry are good and the industry is expected to reap the benefits of growing investments in infrastructure in the country, GCC and other key foreign markets.

Scope

• This report provides a comprehensive analysis of the UAE cement industry• It provides historical values for the UAE cement industry for the report's 2007–2011 review period and forecast figures for the 2012–2016 forecast period • It offers a detailed analysis of production capacity,consumption, imports and exports of cement • It details the regulatory framework for the UAE cement industry• It covers an exhaustive summary on key trends, drivers and issues affecting the UAE cement industry• It details the competitive landscape in the UAE cement industry• Analysis of market entry, growth and operational strategies of key players

Reasons To Buy

• Make strategic business decisions using historic and forecast market data related to the UAE cement industry• Assess growth opportunities and industry dynamics by understanding production capacity, demand, imports and exports figures • Identify the key market trends and opportunities • Assess the competitive landscape in the UAE cement industry market enabling the formulation of effective market-entry strategies

Key Highlights

• The UAE is ranked as the second-largest producer of cement in the Middle East and North Africa region (MENA).• The UAE has very high surplus production capacity.• Cement clinker is expected to remain the largest product category in the cement industry over the forecast period. Portland cement and ready-mixed concrete are the other key categories in terms of market value.• Refractory cements, mortars and concretes was noted as the fastest-growing category during the review period, while factory-made mortars is projected to be the fastest-growing category over the forecast period.• Prices of various types of cement remained relatively stable in 2011. Prices of white cement started to slightly increase from the third quarter of the year, while prices of Portland cement and sulfate resistance cement demonstrated a slight downward trend in 2011. Table of Contents1 Executive

Read more here: http://www.sacbee.com/2012/08/16/4731170/the-uae-cement-industry-outlook.html#storylink=cpy

UAE: Cement industry under pressure

Dubai: Sluggish cement sales in 2011 may rebound this year as regional projects in the billions reinvigorate demand for building materials, say industry executives involved in billion dollar deals across the Middle East.

But the jury is still out pending a full year fin-ancial review as higher production capacity outweighed demand in the UAE where construction fell by almost half in 2011, according to a report.

The GCC Cement Sector Quarterly report, released by Global Investment House late last year, said that regionally in the first nine months of 2011 the cement sector realised a 10.9 per cent top line increase to cap out at $3.4 billion (Dh12.4 billion) but the industry, faced with increasing production costs, suffered a 3.5 per cent decrease in profits.

"The UAE top line increased 1.2 per cent to $888.9 million during nine months of 2011, as compared to the previous year, and costs increased by nine per cent during the period, bringing gross margin to an all-time low of 4.8 per cent," reported Global Investment House.

Average cement prices across the GCC, the report suggested, fell by 3.8 per cent "due to the fact that demand continues to be weak in the GCC, especially from Qatar and the UAE".

The report said: "UAE realisation prices decreased 5.3 per cent from $51.8 per tonne to $49 per tonne in the first three quarters."

‘Facing pressure'

The report attributed the price decrease in the UAE to more supply, noting that "excess supply from new local UAE companies dampen[ed] cement prices. In addition, real estate activity and [the] slow construction market have halted the cement market growth in UAE, as of year-end 2010, 49.5 per cent of the project market is on hold."

The report added that the "UAE continues to face pressure on its cement industry which is proved by a decline [in] sales, demand, profits and higher inventories."

By comparison, the report said that Saudi Arabia saw prices jump 5.4 per cent in the first nine months of last year to $64.6 per tonne.

The increase in Saudi Arabian cement prices was attributed to increased government tenders for large contracts including an order to build 500,000 housing units as well as hospital expansions, projects requiring large quantities of cement.

A construction spike in Saudi Arabia demanding more cement will be met by large capacity built up in the region over the last decade, the report said.

"During the boom periods, there were massive capacity additions which raised GCC capacity from less than 40 million tonnes per annum in 2004 to more than double at around 106.6 million currently," said Global Investment House.

"Ironically, most of these massive capacity additions have come online at a time when the region possibly faced the worst economic recession in many decades."

‘Severe cash crunch'

Regionally, the report noted that the "slowdown in the real estate sector, which accounts for roughly 65-70 per cent of cement consumption in the region, has hit the sector hard. With most builders still experiencing a severe cash crunch, real estate development will likely remain subdued in the near future, staying far from the searing pace seen before the crisis."

There are bright spots, however, in the UAE building materials sector thanks to booming construction projects in the Middle East's infrastructure.

Jafza officials expect to see trade generation by building material companies located in the free zone increase in the years ahead.

Ebrahim Al Jamahi, deputy CEO and chief commercial officer of EZW, UAE region, said in a statement in mid-December that "the recent wave of GCC-wide infrastructure projects that have been announced by governments in the region are expected to drive construction industry recovery."

The Jafza statement cited new estimates that the GCC will spend $3 trillion by 2020 in new construction investments.

Jafza noted that the UAE, Saudi Arabia and Qatar account for 80 per cent of the predicted $452 billion in infrastructure projects now in the books for the region, according to Ventures Middle East.

Rizwan Sajan, founder and chairman of the Danube Group, said the company achieved a prosperous 2011 when it came to selling building materials such as steel, plywood, hardware and electrical items.

Danube's growth for 2011 will likely fall between 25 and 30 per cent, he said, across the board.

Overall, Sajan said: "We're showing robust sales in other areas such as steel." However, in an interview he told Gulf News that as expected, the concrete portion of the business fell short.

‘A challenge'

"The cement industry was hit hard last year," he said. "Supply was much more than demand. Sadly, capacity is much higher than what the market requires. This has tremendous strain on prices."

He added: "For some time it's going to be like this in the UAE. It's going to be a challenge."

Dr J.R. Gangaramani, president and executive chairman of the Al Fara'a Integrated Construction Group, said his company was one of the largest producers of cement in the UAE.

He acknowledged that cement demand had dropped in 2011, especially in the UAE, and that the company could "feel the pinch."

Gangaramani said his company had signed a $21 billion contract to supply cement to an undisclosed project in Saudi Arabia and predicted a strong year ahead with other projects in the UAE and across the GCC for Danube.

"Some other projects are on their way," he said. "In the UAE, the possibilities are open. In Abu Dhabi, I can see good things coming."

He predicted that 2012 will see a strong resurgence in demand of 15-20 per cent in the UAE.

"It could be as high as 20 per cent but a more conservative estimate is 15 per cent," he said.

UAR: RAK Cement reports results through Sept

For the first nine months of 2011 the company reported a loss of AED 16.4 million. Sales fell by 24% to settle at 138.5 million dirhams, compared with sales of the same period in 2010, which was at 182.7 million dirhams.

The company has indicated that the reason for the high losses in the third quarter of 2011 were the escalating cost of sales of the company, which hit 50.6 million dirhams, compared with sales of the second quarter of this year.

UAE: No plan to intervene in cement price

The UAE will not heed calls by dealers to intervene in stopping a decline in cement prices on the grounds they must be determined by the market, a senior economy official said in remarks published on Thursday.

Mohammed Al Shehi, ministry of economy undersecretary, said the ministry would intervene only in case of manipulations or other illegal practices that will harm the interests of dealers and consumers.

Shehi, quoted by the Dubai-based Arabic language daily Emirat Alyoum, was reacting to calls by suppliers on the ministry to intervene in lifting cement prices following a steep decline over the past period because of a downturn in the construction sector and a fall in public infrastructure projects.

“The ministry’s strategy is that cement prices should be left to be determined by market conditions, including supply and demand…we will not intervene in setting its prices as long as there are no reasons justifying intervention,” he said.

“So far, there is not evidence of any manipulation or dumping in the market…we have not seen any illegal practices that justify our intervention.”

Shehi warned that interference by the ministry to push cement prices back up could result in a “sharp and illogical” increase that will destabilize the market.

Official data showed cement production capacity in the UAE is estimated at around 25 million tonnes per year while demand is projected to dip below half output this year. Emirat Alyoum quoted dealers as saying prices have dropped to one of their lowest levels of Dh12.75-13.50 per bag although the ministry of economy have previously set them at Dh18 per bag.

UAE: Competition not cartels are the way forward

There are very few certainties in the dismal science of economics, except perhaps one: the law of supply and demand, and its effect on prices.

Economists as diverse as Aristotle, Adam Smith and Karl Marx cast their collective differences aside to agree that, as St Thomas Aquinas puts it: "value can, does and should be increased in relation

to the amount of labour which has been expended in the improvement of commodities".

Attempts to either cap or collar prices invariably end in tears. And while countries with sufficiently large reserves can subsidise prices up to a point, asking the private sector to do the same is bound to be troublesome.

While a number of the capital's largest stores including Lulu, Carrefour and Spinney's have agreed to the Ministry of Economy's price-capping plan, lowering some prices to the wholesale cost, others by up to 50 per cent, other shops will be unable to follow suit.

Abela, for example, which operates an up-market delicatessen in Abu Dhabi, has said that it cannot afford to do so.

Small convenience stores, beloved by many members of the community, are also unlikely to be able to introduce cross subsidies - for the large retailers will be able to make up the discounts by selling other products at a premium. The move looks destined for failure.

If the competition is forced out of business, the minute the cap is raised prices will spike sharply, with consumers left without a choice.

Something similar was tried in the construction industry a couple of years ago, though prompted by falling prices rather than soaring ones.

The United Arab Emirates Cement Manufacturers Association tried to fix prices at around Dh240 a tonne. Even though the construction industry was picking up, sales fell to about Dh200 a tonne, with the Ministry of Economy saying that it would not allow the creation of a "monopoly bloc that fixes the price to their advantage".

It should also avoid the creation of a monopoly bloc to lower prices.

Consumers' best interests are served by competition, not cartels.

UAE: Union Cement sees US $6m loss as order values dip

Union Cement Company said it made a net loss of AED 22.3 million last year, with sales declining just over a fifth against 2009, as values and volumes of orders evaporated returns.

The Abu Dhabi-listed maker of cement and clinker said the loss compares to an AED 65.1 million net profit the previous year. Revenues fell 20.7% to AED 554.7 million from AED 699.8 million, with gross profits falling to AED 31.9 million from AED 132.2 million.

UAE cement companies have seen profits erode over the last 12 months as a drought in projects – mainly in Dubai - has seen steep falls in the volume and value of orders. Some suppliers have been selling into the Oman market to remain in the black, according to analysts and executives at Raysut Cement Company, an Oman producer.

UAE: Emirates builders stung by cement price rises

Cement manufacturers in the UAE raised their rates as much as 15 per cent yesterday, drawing complaints from the struggling construction industry with contractors saying they cannot afford the increases.

"Our margins are extremely thin," said Matti Mikkola, the chief executive of Dubai Precast. "Anyone in the construction industry is just trying to survive."

Major cement manufacturers sent out notices last week advising clients of the increases. The new rates reflect a rise in electricity and production costs, manufacturers say.

The volume of cement production has also dropped dramatically in the wake of the construction downturn in the UAE.

Prices are now generally between Dh200 (US$54.44) and Dh250 a tonne, far below the Dh420 a tonne the manufacturers were charging during the building boom. The increases announced last week were on average about Dh30 a tonne.

The price rises will send ripples through a construction industry still reeling from the sharp reduction in development in the past two years.

"This is, in my opinion, irresponsible and short-sighted, especially at this moment in time," said Khalfan Saeed Jumma al Kaabi, the chairman of Ascorp Holdings and the first vice president of the Abu Dhabi Chamber of Commerce.

"We should not allow a small group to destroy or hinder the revival of the economy."

The UAE's Ministry of Economy has capped cement prices in the past. But the current prices are below those levels, industry executives say.

Construction companies find themselves caught between the cement manufacturers and builders who are looking to cut costs in hard times.

"We can't go back to the market and ask for customers to pay," said Abdel Razzak Dajani, the managing director of Xtramix Concrete Solutions. "We tried that and they said no."

Contractors are likely to raise their rates on future contracts to cover the costs. However, they will have few options with existing contracts as the increases were announced at short notice, Mr Mikkola said. His rates went from Dh194 a tonne to Dh230 a tonne.

"We will have to absorb all of that," he said. Revenues for the cement industry in the UAE were down 29.8 per cent for the first nine months of last year compared with the same period of 2009, from $728.9 million to $511.5m, according to Global Investment House.

"Operating levels are expected to fall as increased competition and the drop in cement demand continues into 2011," according to a recent report by International Cement Review (ICR), an industry publication.

Overall, cement prices in the region dropped 13 per cent last year from 2009, ICR reported.

"The cement capacity build-up in the GCC and neighbouring regions, alongside a reduction in spending with lowered oil receipts, would place downwards pricing pressure on construction commodities across the whole region," ICR said.

UAE cement companies have been struggling for the past year. In August, RAK Cement posted a Dh1.2m loss for the previous six months, compared with a Dh51.1m profit for the same period in 2009. Sales revenue decreased 20 per cent compared with the same period a year earlier. Union Cement revenues dropped from Dh409m in the first six months of 2009 to Dh313m in the same period last year.

The company posted a Dh9.8m loss for the first six months last year compared with a Dh90m profit for the same period in 2009.

UAE: Dumping by UAE firms hit Raysut's earnings

MUSCAT: Raysut Cement Company, which acquired United Arab Emirates' Pioneer Cement this month, yesterday announced a 27.7 per cent fall in net profit at RO20.72 million for last year, hit by dumping from neighbouring UAE producers coupled with slackness in unit price realisation in export markets. This is against RO28.68 million posted in the previous year.

The company's sales revenue also dipped by 27.3 per cent to RO64.98 million from RO89.35 million during the period under review.

"The full year profit is less than our estimate. Dumping of cement by United Arab Emirates producers in northern Oman continued in the fourth quarter. The company was not able to compete with UAE producers," said Kanaga Sunder, senior research analyst of Gulf Baader Capital Markets.

"The bottomline is below our expectations, but the top line is above our estimate. The company must have increased their sales volume in the fourth quarter," he noted.

The overall unit price realisation was under tremendous pressure. There has been a slowdown in export demand, especially in neighbouring Yemen due to pressure from Saudi companies. "Yemen is one of the major export markets for Raysut. Export market price realisation also came down." Raysut Cement has a joint venture in Yemen, which enables the company to become a supplier of cement in southern part of Yemen with terminal facilities in Mukulla and Aden.

Both Raysut Cement and Oman Cement brought down their selling price in the local market, in a move to effectively compete with its rivals selling their products in Sohar and Muscat.

Proximity to Sohar

Proximity to Sohar was one of the big advantages of UAE producers, and they were even meeting the bulk users' demand in Muscat. "Transport cost for UAE cement firms to sell their products in Muscat is only RO3-4 per tonne, while in Sohar, it is around RO2 per tonne. Bulk cement consumers depend on UAE companies."

Raysut Cement shares dipped 3.53 per cent to RO1.174 on the Muscat Securities Market, amid selling pressure of 66,180 shares.

Sunder noted that with the recent acquisition of United Arab Emirates's Pioneer Cement, Raysut will be in a better position to cater to the demand of customers in northern Oman.

"They can easily bring in cement from UAE to northern Oman, which will benefit the company this year," he added.

Total expenditure of the company came down to RO42.36 million in 2010 from RO61.58 million in the previous year.

The recent acquisition of Pioneer Cement Industries for $172 million has added another 1.7 million tonnes, stretchable to 1.8 million tonnes, to the existing capacity of Raysut CementRaysut group making it to about 4.7 million tonnes per annum. The entire amount has been financed by long-term borrowing from the consortium of bankers led by BankDhofar.

UAE: UAE is third largest Arab cement producer

The UAE is the third largest Arab producer of cement and production in the region could hit 300m tonnes a year in the coming years, it was reported on Sunday.

Cement plants in the emirates currently produce as much as 31m tones every year and expansion plans could see capacity increase to 42m tonnes per year, according to the Emirates 24/7 website.

Figures from the Arab Industry Union revealed that the UAE currently accounts for seventeen percent of the 180m tonnes of cement produced in the Arab region every year.

The leading producer is Egypt, with a yearly capacity of around 75m tonnes a year. Second in the rankings is Saudi Arabia, which currently pumps around 45m tones, but is expected to increase annual capacity to 60m tonnes over the next few years.

The report estimates that expansion in the sector could see cement production in the Arab world top nearly 300m tonnes a year in the coming years, the report added.

However, Gulf cement companies have seen profits fall by over twelve percent in the first half of this year as a result of the cancellation of hundreds of projects, it was reported in September.

Figures from the Bahrain-based investment bank Gulf Finance House (GFH) found that cement companies in the region saw profits slump by 12.4 percent during the first six months of 2010, according to a report by the Abu Dhabi-based The National newspaper.

Average debt among the companies also fell 8.9 percent and the downturn has also forced staff to take unpaid leave or transfers, the report added.

UAE: Oman's Raysut Cement to buy UAE firm

Raysut had said was planning acquisition

Company did not disclose size of deal

DUBAI, Oct 28 (Reuters) - Raysut Cement RAYC.OM, Oman's largest cement producer by market value, will buy the United Arab Emirates' Pioneer Cement Industries, the company said in a statement on the Omani bourse on Thursday. Raysut's chief financial officer said on Sunday the company was holding acquisition talks with several companies and was expecting to reach a deal within a month. [ID:nLDE69N01C]

"This project will serve the strategies and goals of the company and will add more value to the shareholders and investors of the company," Raysut said in the statement.

The company did not give details of the size of the deal. Pioneer Cement Industries is based in Ras al-Khaimah, a northern emirate in the United Arab Emirates federation.

Analysts had previously said Raysut was looking for an acquisition with a potential value of between $150 million and $200 million and had cited Ras Al Khaimah Cement RKCC.AD (RAK Cement) as a likely candidate.

Shares in Raysut traded down 0.2 percent at 0844 GMT.

Raysut said last week its nine-month profit before tax was 19.03 million Omani rials ($49.42 million), down from 24.2 million rials a year ago. 

UAE: Times are tough for cement firms as prices fall and demand drops

Dubai: Cement companies serving the Dubai market are being buffeted by low prices and are seeking to sell their products elsewhere in the Gulf and Middle East to bolster their balance sheets.

Demand for cement in the emirate has dropped from more than 20 million tonnes in 2008 to 13 million tonnes today, a senior industry executive said.

Antoine Duclaux, CEO of Lafarge Emirates Cement, has called on the authorities to assist the industry.

The Lafarge Cement Factory in Dubai. Demand for cement in the emirate has dropped from more than 20 million tonnes in 2008 to 13 million tonnes now, a senior industry executive said.

"Investors in the cement industry put $4 billion (Dh14.6 billion) into the sector over the past 10 years. The government enjoyed good relationships with the players, but current profitability is zero and in some cases negative. Something has to be done; some will be leaving," he told Gulf News.

The UAE has 20 cement companies — 10 large ones and 10 grinders. On the ready mix side, 45 players with a capacity of 23 million cubic metres a year in 400 plants across the country are competing for a smaller pool of clients.

"They are all still in the game but with difficulties. Prices had to be adjusted so profitability is poor. Many export to Oman, given the growth. But cement sales in Oman are also challenging," Duclaux added.

Price per tonne

The price of cement peaked at Dh400 per tonne in 2008, prompting the government to cap it at Dh360. The price today is around Dh200 per tonne for cement ex-factory and ready mix products fetch about the same value proportionately in cubic metres.

"The ready mix sector will face consolidation. We expect some adjustments and need help from the authorities if they want the industry here," Duclaux added.

The ready mix sector though has an advantage in as much as it is more mobile, Terry Mason, company manager for Lafarge Readymix Gulf, told Gulf News.

The company has three ready mix plants, one each in Dubai, Sharjah and Ajman, with a total capacity of 1.5 million cubic metres a year.

It is looking at new opportunities by sending products and machinery to Oman, Saudi Arabia, Kuwait, Jordan and Iraq.

"Here we're working now with the same few guys. Although the market has picked up a bit, one can't plan ahead," Mason added.