Revenue was aided by an 82.9% y-o-y improvement in cement volume from operations within the Kingdom and a 51.5% y-o-y growth in revenue from outside the Kingdom, according to the report from Al Rajhi Capital, a leading financial services provider.

Cement sales volume for Q2 2021 came in at 0.7 million tons, 7.9% higher than our estimate. Gross profit and operating profit increased by 2.0x y-o-y and 2.5x y-o-y respectively. The improvement in profitability was at the back of higher volume and the resulting improvement in operating leverage, the report said.

For Q2 2021, cement volume for the industry grew by 21.3% y-o-y, while the Western region offtake increased by 40.4% y-o-y. The growth was at the back of lower base on account of Covid related restrictions and the performance of ACC was better than both the industry and the region, the report said.

“Going forward, we expect cement volumes of ACC to come under pressure in Q3 2021 at the back of lower construction activity in the Kingdom, due to uncertainties relating to the new building permit norms and shortage in labour. However, we expect the situation to improve by Q4 2021. Overall, we reduce our target price to SR43/share from the earlier target price of SR47/share, and also reduce our rating to ‘neutral’,” Al Rajhi Capital said in the report.