Shares in Saudi Arabia’s Tabuk Cement fell early on Sunday, as the company announced a drop in earnings for the year 2018.

The company reported a net loss of 32.45 million Saudi riyals ($8.65 million) for the fourth quarter (Q4) of the year 2018, compared to 21.53 million riyals for Q4 2017, missing EFG Hermes’ Q4 2018 estimate of 2 million riyals loss.

“Very disappointing set of results. Although sales volumes recovered modestly Q-o-Q (quarter-on-quarter), they faltered the Y-o-Y (year-on-year) trend of a constant cement demand,” Sameer Kattiparambil, an analyst at EFG Hermes based in Muscat, told Zawya by email.

“We do not rule out the presence of any one-offs in the company’s cost structure, which might have elevated the cost structure during the quarter,” he added.

The company’s sales volumes were at 0.26 million tons in Q4 2018, an 18 percent year-on-year drop and a 20 percent quarter-on-quarter increase.

“Although we believe Tabuk’s short-term performance will be challenging, it would ramp up its utilisation significantly once execution of the northwestern projects, including NEOM, commences,” Kattiparambil.

Tabuk Cement’s shares were trading 1.96 percent lower at 12 riyals by 12:23 GST on Sunday, but have added 8.11 percent so far since the start of the year 2019.

“However, we currently have a Neutral rating on Tabuk as it has a fully valued stock (2020e EV/EBITDA of 10x) and as it carries a leveraged balance sheet. We will revisit our numbers once the full financials are released,“ EFG Hermes’ Kattiparambil ended.

Full-year 2018 net loss after Zakat and tax amounted to 98.9 million riyals, compared to a net loss of 23.8 million riyals for the full year 2017.

(Reporting by Gerard Aoun; Editing by Mily Chakrabarty)


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