Kingdom is self-sufficient
Input costs up, profits down
In some respects, Saudi cement producers, important constituents of the Tadawul stock exchange and bellwethers of the national economy, have never had it so good.
The kingdom has an array of giga-projects underway and is preparing to host a series of high profile international events, from the World Expo in Riyadh in 2030 to the Fifa World Cup four years later.
In addition, the Public Investment Fund (PIF), controller of a hefty $940 billion in assets, last year pledged to reduce activity overseas to focus on the domestic economy.
As a result, 10 out of 15 Tadawul-traded cement producers sold more product from January to March than the same three months last year according to Yamama Cement, among the largest industry players in the kingdom.
A $1.5 trillion total development pipeline, and $155 billion worth of projects currently assessing bids, should help “keep local demand for cement elevated in the coming years,” according to Junaid Ansari, director of investment strategy and research at Kamco Invest in Kuwait City.
Saudi Arabia is self-sufficient when it comes to cement production and consumption. It is a net exporter of cement and clinkers, an intermediate product.
Yet performance in the first three months of 2025 was mixed. Combined net profits in the sector declined 2.9 percent on a quarterly basis, and 19 percent annually, according to data crunched by Kamco Invest and shared with AGBI.
Six producers experienced falling net profits both at the quarterly and annual levels, and only three — Yamama Cement, Qassim Cement and City Cement Co —saw increases.
Share prices in the sector have broadly been sliding over the past year in line with declines in the wider Tadawul.
Margins are being squeezed by intense price competition and rising input costs, according to Ansari.
There is excess capacity in the sector which has a utilisation rate of only around 70 percent. Cement prices are likely to come under further pressure if there is an increase in capacity, he says.
“There is tough competition,” Ansari adds.
The role of the Saudi government is also critical. A decision by state-controlled oil giant Aramco at the turn of the year to increase the price of fuel products it sells to cement producers contributed to squeezing their margins, according to Fadwa Aouini, an analyst at Tunis-based AlphaMena.
Saudi Cement, the kingdom’s largest publicly-traded manufacturer by sales from January to March, said in a disclosure in January that the hike would increase its production costs by 8 percent.
Growing competition in the export market coming from Egyptian producers lifted by the devaluation of the pound also ate away at some Saudi companies’ performance, Aouini said.
Tax charges and internal reorganisations have also hit many of the businesses’ bottom lines, according to disclosures.
PIF has also curtailed spending inside the kingdom. This is causing pauses and delays across several of its giga-projects.
“On the domestic front most of the [cement] sales are for big projects. If the government is going to put a pause on that, it will certainly affect producers,” Aouini said.
The Saudi cement sector on the stock market
Fifteen cement companies are listed on Saudi Arabia’s main stock index. Combined, these have a market capitalisation of $11.7 billion — 1.4 percent of the index total excluding Saudi Aramco.
Yamama Cement is valued at $1.9 billion, making it the largest cement company by market capitalisation, followed by Saudi Cement ($1.6 billion), Qassim Cement Co ($1.5 billion) and Southern Province Cement Co ($1.1 billion) according to AGBI calculations based on bourse data.
The quartet’s stock prices have tumbled over the past four years: Yamama Cement is down 59 percent since June 2021, Saudi Cement has fallen 39 percent, Qassim Cement has lost 40 percent and Southern Province Cement Co tumbled 56 percent.
The four companies’ trailing price to earnings (PE) ratios range from 14.7 to 19.6, bourse data shows.
The wider Saudi stock market has a PE of 16.9, according to Simply Wall St.
