Oman Cement profit hit by gas price increase

22/07/2015 05:56 AST

Doubling of the natural gas price from January this year has substantially pulled down the net profit of Oman Cement Company, the second biggest cement producer in the Sultanate, by 40 per cent to OMR5.44 million for the first half of this year, from OMR9.09 million for the same period of 2014.

On January 1, the Oman government doubled the natural gas price for industries to 41 baisas per standard cubic metre (cc) from 20.5 baisas per standard cc, with an inbuilt annual increase of 3 per cent thereafter.

The impact of the revision affected the net earnings of gas-intensive local industries like cement, ceramic tiles, steel and glass manufacturers, since a sizeable portion of their manufacturing cost is for fuel.

Oman Cement said that the fall in profits was mainly due to the higher energy cost.

"We have, however, continued our efforts to minimise the impact by better cost and selling price management," said Oman Cement in its first half results.

The profit before tax for the six-month period also dipped by 39.26 per cent to OMR6.02 million for the first half of 2015 from OMR9.92 million for the same period of last year, which also included an amount of OMR2.1 million being income on sale for available-for-sale investments.

The company's sales revenue was slightly lower at OMR25.53 million for the first half of this year against OMR25.68 million for the same period last year, while total income stood at OMR25.71 million, against OMR26.04 million during the period under review.



New cement mill

Referring to the progress on expansion programme, Oman Cement said its new cement mill of 150 tonnes per hour capacity (with supporting infrastructure of cement silos and bulk dispatches) is expected to be completed in the fourth quarter of 2015.

The company is also taking efforts to reduce emission levels and accordingly awarded a contract for upgrading pollution control equipment for line -2 to FLSmidth with a total value of $11.3 million. The work has already been started and the project is expected to be ready by the second quarter of 2016.

Oman Cement's production fell by 2.33 per cent at 1,008,779 tonnes of cement in the first half of 2015, from1,032,898 tonnes for the same period last year, mainly due to limited availability of clinker.

"We had targetted higher levels of clinker production during the period. However, due to technical constraints resulting in the prolonged shutdown of our kiln 3 which was under planned maintenance shutdown, our clinker production remained lower than planned. With the efforts of our technical teams, the kiln has now commenced production and we expect better operational performance in future," said the company.

Times of Oman