First third-quarter results come in

The third-quarter earnings season has had a bumpy start, although there are encouraging signs. Saudi Arabia's Yanbu Cement said yesterday its third-quarter profit declined 4.1 per cent, which was slightly better than analysts expected. Net income fell to 94 million Saudi riyals, from 98m riyals over the same period last year, the company said in a statement on the Saudi Tadawul bourse website. Third-quarter operating profit dropped 5.8 per cent to 97m riyals, or 8 per cent higher than NCB Capital's estimate.

"The decline in the quantity and value of sales is a result of intense competition from the entry of new cement companies and a near doubling of capacity, plus the ban on export," the company said in the filing. Farouk Miah, an analyst at NCB Capital in Saudi Arabia, said the results were poor but not as bad as feared. "All these factors have been present for the last nine months and will probably remain in the picture for the next six months," he said.

Yanbu Cement was one of the first two stocks to report third-quarter earnings in Saudi Arabia yesterday. Almarai, a beverage company, also reported its earnings, posting net income of 424.5m riyals, which was 6 per cent lower than NCB Capital's estimates. Other investors were pleased, as the shares climbed 4.6 per cent to 210.25 riyals. Analysts expected the results to outperform the same period last year because Ramadan occupied less of September this year but the increase was greater than expected.

This could indicate positive results to come for the remaining cement stocks listed in Saudi Arabia. "It may mean companies' results may come out 3 or 4 per cent better, which is positive for cement," Mr Miah said. Saudi cement production declined 5.6 per cent in August to 3.05 million tonnes, compared with 3.23 million tonnes during the same month last year, according to industry data on the website of Yamama Saudi Cement. Exports dropped 4.3 per cent to 134,000 tonnes in August.