Impacted by the slowdown in the construction sector, Oman Cables Industry (OCI) groups’ net profit for the year ended December 31, 2019 declined 20.9 per cent to RO7.22mn compared with RO9.13mn reported a year ago, the company said in its audited annual results on the Muscat Securities Market (MSM).
In its filing to the MSM, OCI revealed that the decline in profitability in the year under consideration is mainly due to the reduction in sales volume. The company however said that it tries to counter the fall in sales volume by improving efficiency and controlling cost.
In 2019, OCI group’s overall sales fell 14.66 per cent to RO210.08mn as against RO247.01mn in the corresponding period a year ago.
‘The effect of oil price levels is having an impact on all business sectors, and the pressure on the sales value is felt in all markets and across the different segments. Slowdown in the construction industry is affecting cable market severely. Company volumes were impacted by the current market conditions,’ OCI said in its filing.
Explaining their performance in the last year, OCI said its sales in the third quarter was affected due to seasonality and lack of major projects. In the fourth quarter revenues from major projects avoided further impact of slowdown in the market.
The company also expressed concerns that low oil prices may negatively impact capital spend on major projects in the current year thereby affecting the local economies and GDP.
‘This may have cascading effect on the demand for cables. This coupled with the established capacity in the region may result in pressure on pricing,’ OCI said in the filing.
On 2020 outlook, the company said that it expects to maintain its presence in the market and is well equipped to face the challenges.
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