Saudi Arabia’s cement sector is expected to witness a fall in revenue in the second quarter of 2018, according to a report released by Al Rajhi Capital, a leading financial services provider in the Kingdom.

According to Al Rajhi’s Q2 2018 earnings estimates report, the companies under Al Rajhi’s coverage are expected to report a ~6% year-on-year decline in revenue, while earnings are likely to fall by ~10% year-on-year.

The cement’s sector sales volume declined by 16.7% y-o-y in the first two months of Q2, which was put down to the restructuring of the industry, and the seasonality effect (summer, Ramadan and Eid), added the report.

On a quarterly basis, sale volumes are expected to be lower than the previous quarter due to the seasonality effect, the report said.

“In the first two months of Q2 2018, 15 cement companies have reported a y-o-y decline in sales volume, led by Riyadh Cement (-44.1% y-o-y) and Cement City (-37.5%), while only two companies have reported an increase viz Tabuk Cement (+82.4% y-o-y) and Hail Cement (+28.7%),” it outlined.

However, the total inventory for the sector has increased slightly by 1.2% q-o-q (~36.2 million tons by the end of May) due to an increase in production and declining sales.