Net income: OMR1.5mn, -46% Y-o-Y, -53% Q-o-Q, -41% vs. EFGe
Revenues: OMR12.5mn, -15% Y-o-Y, -10% Q-o-Q, -6% vs. EFGe
 
Oman Cement Company (OCC) reported its 2Q18 headline results, with net profit of OMR1.5mn, -46% Y-o-Y, -53% Q-o-Q, -41% vs. EFGe. Reported revenues, however, coming in at OMR12.5mn were only marginally lower than our estimate of OMR13.3mn (-15% Y-o-Y, -10% Q-o-Q). Although the details are unavailable as of yet, we suspect the significant decline in earnings Y-o-Y could be due to pressure on its profit margins on: i) weaker-than-expected cement prices, partly attributable to the competition scenario in the low-demand summer months; and/or ii) inflationary impact. 
 
The company has not yet provided further details on cement unit sales or prices. 
 
Our view: Overall, the weak set of earnings figure supports our view that competition is still very fierce. We currently have a Neutral rating on Oman Cement as we are expecting pressure from imported cement would continue to be an overhang on OCC’s volume growth plans despite the company increasing its cement capacity recently. Moreover, we are not expecting any revival in cement prices over the medium term, especially after Saudi Arabia liberalised its cement export policies recently, as it could potentially increase the competition scenario in the region. We will provide further updates once the full financials are released.
 
Oman Cement Co.: OMR0.380 as of 11 Jul. 2018, Rating: Neutral, TP: OMR0.464/share, MCap: USD331mn, OCOI OM/OCOI.OM
Sameer Kattiparambil