Raysut Cement Company: MEED assessment

13 June 2012

After a strong start to 2012, it is expected the company’s growth will continue in line with the pick-up in Oman’s projects sector

As with several businesses in the construction materials sector, Raysut Cement Company had a difficult few years after the UAE construction market collapsed in 2009. The company’s profit in 2010 and 2011 was more than 26 per cent lower than the RO31m recorded in 2008.

The firm attributes the drop in profits to UAE firms flooding the sultanate’s market with cheaper cement. Another factor behind the drop in profits in 2011 was the political instability in Yemen, its main export market.

However, Raysut has enjoyed a strong start to 2012, with net profit before tax for the first quarter of the year up 27 per cent compared with the same period in 2011. The growth in profit correlates with a pick-up in activity in Oman’s projects sector, which by the end of May had risen more than 16 per cent compared with the same period in 2011, according to MEED’s Gulf Projects Index.

Oman’s projects sector is expected to continue its upward trajectory for the next three years, with demand for cement set to rise seven per cent by the end of 2012 as the government pushes ahead with a number of major infrastructure schemes.

Political unrest in early 2011 prompted the Omani government to reaffirm its commitment to the spending set out in its five-year development plan for 2011-2015.

Raysut is also set to benefit from a pick-up in the UAE’s construction sector. A rebound in construction activity in the country should ensure less dumping of UAE cement in the sultanate. It will also provide more opportunities for Raysut’s subsidiary, Pioneer Cement, to increase sales within the UAE.

Raysut will be hoping for an improvement in the political situation in Yemen, which would provide a boost to its export business. The company’s two shipping subsidiaries will enable Raysut to take advantage of emerging construction markets elsewhere.

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