RAK Cement, a cement producer in the Emirate of Ras Al Khaimah, has announced to the Abu Dhabi Securities Exchange that it has won American Petroleum Institute (API) approval for the manufacture of oil well cement.
“RAK Cement will now begin marketing Oil Well Cement in addition to its existing products,” Mike Richardson, General Manager, said in a company statement yesterday.
The API accreditation will signal the firm’s entry into a market which has proved more resilient to the economic downturn than residential and commercial construction, and gives the firm an opportunity to buck a recent trend of muted revenues and declining profit.
Over the first six months of this year the company saw revenue fall 25% from AED 129.2m to produce a net loss of AED 4.9m, more than triple the AED 1.26m loss at the same point last year, as UAE building materials suppliers continued to see margins squeezed by a dearth in domestic projects.
A lack of projects to soak up supply is squeezing results, analysts say. “There is about 10-15 million tonnes of excess capacity in the UAE,” estimated Umar Faruqui, financial analyst at Global Investment House, which he added would prevent Saudi cement companies – currently enjoying increasing growth – from lobbying to be able to export to the emirates.
The company is capable of producing 960,000 tons of Clinker and 1,000,000 tons of Cement per year from its plant in Ras Al Khaimah.
Weak financial performance prompted market speculation earlier in the year that the company was ripe for a takeover bid.
