Not the time to harden line on Qatar Cement

Weaker than expected sector demand and continued uncertainty around Fifa 2022 World Cup contracts makes Qatar National Cement Company an investment to wait on for the moment. The company is considering its options. According to analysts it is looking at two potential plans to expand on the expectation that it will benefit from a rise in demand for buildings ahead of the World Cup. Plan A is to increase its capacity from 4.4 million tonnes a year to 6 million. Plan B is a more modest increase between 10 and 20 per cent. Both plans reflect a healthy expectation of growth. The problem is the figures from the quarry face do not yet justify this image of optimism. GCC countries' cement sectors turned a corner last year, after a difficult two years struggling against a fall in available credit following the global financial crisis. But Qatar's cement sector disappointed with worse than expected growth figures last year. Consolidated revenues for the sector declined by 5.2 per cent to US$325.3 million during last year, compared with $343.1m in 2010. The fall was due in no small part to the UAE having a surplus of cement that it is offloading to Qatar at prices that undercut Qatari operators. The UAE surplus looks set to continue, as the Emirates runs an excess of up to 24 million tonnes a year. This is why Qatar National Cement has so much riding on the anticipated World Cup contracts. Hettish Kumar, an analyst at Global Investment House, said the Qatari governmentwould award many of these contracts to local firms. "[Qatar National Cement] would benefit largely from the World Cup-related contracts. The hope is that they will drive demand by another 2 million to 3 million tonnes annually. But it will take time to award these," Mr Kumar said. Regardless, cement-sector margins across the region remain tight. Investors may not see returns for some time. twitter: Follow our breaking business news and retweet to your followers. Follow us

Not the time to harden line on Qatar Cement

What's Down: Weaker than expected sector demand and continued uncertainty around 2022 World Cup contracts makes Qatar National Cement Company a investment to wait and see on for the moment.