Increased competition and high copper prices have pulled down Oman Cables Industry's (OCI) net profits by 38 per cent in the first quarter of 2011.
The sultanate's largest cable maker reported a net profit of RO1.02mn for the three months ended March 31, 2011, as against RO1.7mn during the same period last year.
In a filing to the Muscat Securities Market on Sunday, OCI said that its board of directors is mulling raising prices in order to boost sagging profits.
According to the statement, "The net profit of the parent company for the current period is lower, due to intense competition from the increased number of manufacturers in the region, which is putting pressure on the sales prices."
"The margins were further impacted by steep price increases in raw materials. However, the rise in the price of copper and aluminium could be passed on to the customer."
Joice Mathew, analyst, United Securities, told Muscat Daily that copper prices have risen steeply in the 12 months between the first quarters of 2010 and 2011. "If you compare the first quarter copper prices of 2010 and 2011, there has been a 32 per cent increase," he said.
Horizon Securities analyst Praveen Nevatia said that from the initial OCI reports, net profits could be boosted by raising the prices of products. "What we assume is that growth in revenue could be made by increasing the prices of products as well as increasing volumes. It would be more from increasing prices rather than increasing volumes, because the volumes have not increased as much as we expected."
© Muscat Daily 2011
