Southern Cement announced its preliminary 4Q11 results on 17 January 2012 after market hours. All profit lines grew 48-52 per cent Y-o-Y driven by strong sales volumes, as well as lower costs.

This is an excellent set of results from SPCC, due largely off the back of increased sales volume in 4Q11. This was coupled with a Y-o-Y increase in price. The better than expected demand base in the Southern region of KSA, coupled with supply issues at competitor companies in the Western region has aided SPCC. With inventory of over two million tonnes, SPCC is well positioned to benefit from any increase in cement demand in KSA.

The company attributed the higher profitability to increased local sales due to increased demand points in the Southern region in 4Q11. Southern reported a 33.6 per cent Y-o-Y rise in sales volumes in 4Q11 as compared to 15.6 per cent increase for the sector.

The next major catalyst for SPCC is its new 1.5mn capacity line expected in mid-2012. With its location in the Western region ofKSA, it is likely to be a major driver for SPCC as it can meet demand in the Central/Western regions, as well as lowering the average cost per tonne present at SPCC. However, due to the ongoing uncertainties with regard to fuel supply from Aramco, it is assumed the new line will commence in 2013, six months later than expected.