Weak Demand Forces Saudi Cement To Keep Hofuf Kilns Closed

Saudi Cement Co, the kingdom’s largest listed cement producer by market value, said it would not restart after refurbishment work two kilns at its Hofuf factory due to high inventory levels and weak demand.

The company has been hurt by soft local demand for cement this year, reporting falling year-on-year profit in the previous two quarters.

Up to August, its sales had dropped 14 percent year-on-year because of increased volumes being produced by Saudi cement firms and stagnant demand, it said in a statement on Monday.

“The feasibility of operating these two kilns shall be reconsidered whenever market conditions warrant that,” the statement said.

The company expects to record annual depreciation charges of about 7.6 million riyals ($2 million) related to the kilns from the fourth quarter onwards.

Saudi Cement operates one more plant in the Ain Dar region in the east of the kingdom.

The company’s shares closed at 124 riyals on Sunday. They have gained about 12 percent in the past 12 months, lagging an 18 percent rise in the Saudi Arabian Cement Index over the same period.