| 07 Sep 2010 |
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Decline in realty sector hits GCC cement industry
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DOHA: The GCC cement industry did not perform well during the first half (H1) of this year as major real estate projects were halted in the wake of the global recession. According to a Global Investment House report, the performance of cement and building materials companies in the region was adversely impacted due to shelving of major construction ventures.
GCC cement companies witnessed 13.8 percent drop in top line revenues and announced a poor 12.4 percent decrease in profits for the H1 of 2010.
Net profits decreased from $938.8m in H1 2009 to $822.1m in H1 of 2010. Financial restructuring and strength of cement companies is visible in H1 of 2010 as assets and equity increased 0.1 percent and 1.2 percent, respectively.
Non-core income contribution to the bottom-line was however minimal at 14.1 percent during H1 of 2010 as compared to previous highs of over 30 to 40 percent in the earlier periods. The contribution has gone down as most of the companies have shifted their focus away from risky real estate and property investment and their investment value has already been wiped off because of the previous tumults in the equity and real estate market.
Kuwait and Qatar maintained gross margins of 33.2 percent and 41.6 percent, respectively. Gross margin of both countries witnessed a huge increase from the same period a year ago, increasing in Kuwait from 25 percent and in Qatar from 22.7 percent in H1, 2009, the increase is accompanied by lower cost of sales.
© The Peninsula 2010
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