With the enhanced level of government spending along with key project implementation, the industry sector is expected to catch further momentum in the coming quarters.

The total earnings of the sector firms in the Muscat Securities Market for the first quarter of the current fiscal stood at RO 19.922 million showing an increase of 41.6 per cent on quarter to quarter basis.

At the same time the total revenue increased marginally by 0.3 per cent on year on year basis driven mainly by lower revenue from the construction and commodity majors. The same increased by 13.1 per cent on a sequential basis. In the same quarter cement and commodity sector earnings saw major revival.
“The RO 1.634 billion infrastructure spending by the government in 2012 spells good news for the cement and commodity firms. We anticipate the earnings of this sector majors to remain in higher double digits in the coming quarters”, says a research report of Gulf Baader Capital Market (GBCM).

According to industry estimates, the total cost of the ongoing projects in Oman is estimated to be around RO 33.5 billion. In its Eighth Five-year Plan, the government allocation towards project investments is around RO 13.693 billion as against the earlier estimates of RO 12.056 million.

The total approbations allocated for the first and the second years of the plan (2011 and 2012) and the projects continuing from the Seventh Plan will amount to RO 8.555 billion, of which an amount of RO 1.634 billion will be for the cost of the new projects scheduled for this year.

The total cement demand in the country is expected to increase by 7 per cent year on year and touch six million tonnes in 2012.

Till recently, the Omani cement manufacturers were victims of cheap inflow of cement from UAE due to slump in the real estate sector in the region.
With the rising operational costs, the UAE players are no longer in a situation to offer the cement at lower prices, which gives strong case of market share capitalisation by local players during the current year.

“The government’s continuing thrust in the construction and infrastructure sector has propelled a rise in the cement consumption in the country which is a positive sign for the sector,” says the report.

Oman Cement posted revenue of RO 13.964 million in the first quarter, an increase of 8.6 per cent on year on year basis. The company recorded a net profit of RO 5.144 million helped by higher sales volumes coupled with higher noncore income.

At the same time the total revenue of Raysut Cement group stood at RO 24.640 million in the quarter, reporting a surge of 21.8 per cent. The contribution from its subsidiary to the group revenue stood at RO 7.960 million as against RO 5.3 million during the previous year.

“We would continue to follow a bottom up approach in the Industry sector with the clear focus on quality, low beta domestic plays. We expect the sector majors to show stronger revenue growth moving forward led by stable domestic demand growth, higher capacity utilisation and the ability to work on reducing expenses thereby creating better economies of scale”, say the analysts at GBCM.

Al Anwar Ceramics continued to report solid numbers with the persistence of peak capacity utilisation levels and also the maintenance of higher realisation levels. The company reported a total income of RO 5.133 million, an increase of 4.4 per cent year on year.

According to GBCM figures, the results from the commodity players were mixed.
Al Jazeera Steel reported stronger revenue growth on the back of renewed demand and improved capacity utilisation levels in both pipes and MBM units.

The total revenue of the company increased by 21.4 per cent to RO 27.385 million and the earnings grew by 12.6 per cent to RO 1.134 million. Oman Cables posted revenue of RO 65.843 million, reporting a decrease of 5.6 per cent, while the sales revenue of National Aluminum Products decreased by 20.8 per cent on year on basis to RO 4.084 million.

Overall the revenue of Galfar stood at RO 72.183 million, reporting a decline of 7.6 per cent on year on year.

Al Hassan Engg witnessed a 24.0 per cent increase in its revenue. Voltamp Energy witnessed a drop in its revenue by 4.8 per cent to RO 3.508 million.
The revenue growth of Asaffa Foods and Dhofar Cattle Feed (DCF) remained in double digits led by higher local demand and the presence of strong local branding. Topline of Asaffa grew by 14.6 per cent year on year, while the earnings increased by 30.1 per cent. DCF reported 10.6 per cent growth in revenues.