January 2009

Despite the cloud hanging over the GCC real estate and construction sectors, the report highlights that the regional cement sector offers favorable long term investment opportunities. Notably, GCC cement producers are expected to add around 50 million metric tons of additional capacity over the next three years. The cement supply-demand forecast of the report also suggests that the market will move from a production deficit in 2008 to a broadly balanced market in near term, but back to a deficit over the medium to long term. Therefore, 2009 could be a good time to enter the sector. Relatively strong volume and earnings growth and attractive dividend yields should support valuations over the long term.

However, there has been a sharp drop in revenue and earnings growth in the last three quarters of 2008. Revenue and earnings growth are expected to moderate from a very high level as weakening demand and liquidity constraints force many developers to slow down the pace of new developments.

Some of the key industry trends identified and discussed in the report includes rising local clinker production, falling energy prices, production-consumption gap, rising imports, alternative energy sources, increased plant size, weaknesses in transparency, etc.

For more details please click here to access the complete version of the GCC Cement Industry Report.