Oman Cement Company SAOG ($OCOI)

Thank you for coming to -- go through Oman Cement, the year-end quarter 4 2025 update on the performance, the financials and accordingly, we proceed. As we just regularly for the disclaimer, whatever information has to be taken at the investor call side once it comes to any investment decision per se. On the agenda -- the usual pack the Oman Cement being quite the manufacturing of the cement and the leading pioneer in the country to continue to sustain the supply to the demand and help into developing the country as infrastructure and construction material input provider. So on the financial highlights, if you -- can you see the screen, please? Yes. Can you see the screen, the graphs?

Yes, we can. Thank you.

Okay. I just wanted to make sure that we are speaking on the same page. On overall, there's a slight improvement on the cement sales comparative to the 2025 with almost 100,000 metric tons, 96,000 metric tons, which speaks itself about the market competition and the lifting happens once it comes to cement sales itself. The production was also marginally positive if you compare it to 2024 by almost 2.2%. However, the clinker production in 2025 is considered lower than our budget. We wanted to do better than previous year. But it's -- yes, we did better than last year, but we didn't beat the budget. We wanted to continue to deliver further value addition even to our stretch targets internally. That's because of some shutdowns in the Kiln 3, along with the continued trips for specific kilns. However, the overall higher limit in this clinker is around 97,000, which contribute positively to the performance. If we continue and we go on the performance of the financials overall comparatives, you will find that the year 2025, the revenues have been better than 2024 by almost OMR 1.7 million. However, once it comes to the net profit, the impact is a delta of almost 0.25% or 24%, 25%, mainly because of the -- sorry, OMR 3 million delta to the OMR 11.1 million in 2024. Our net margin impacted unfavorably due to this kind of competition and cost increase to almost 11.89% on the net margin profit -- net profit margin comparative to the -- or comparable to the 16.34% in 2024. So in a nutshell, the performance was having some challenges over the past year and due to some specific changes, specifically on the lease rental, which has costed us a bit of increase in the cost once it comes to the higher lease rental increasing to almost to OMR 1.2 million comparative to 2024, which was only OMR 76,000. And then also another element is this non-core profit, which has been a delta negatively impacted of OMR 1.2 million due to the distribution of dividends and not much of surplus cash maintained on the bank core accounts and deposits. Then also, there was adjustment of almost hydrated clinkers over the past 2025, roughly around OMR 1.5 million. And then the increase in the higher electricity due to import of electricity from the grid in the peak time. This is mainly on the performance highlights. And however, the market rebound and looking to the investor trust through the movement in the share price trending above the OMR 0.500, which used to be around in the range of OMR 0.390s in the 2024 and then moving to almost OMR 0.400 in 2025. And as much recent last, which is 2 days ago, it hits the OMR 0.545, which gives the investor confidence and the appetite to keep Oman Cement on their portfolio, which we appreciate and our commitment to continue to build and add value wherever it is possible. I'll open the floor for Q&As. And before that, I just want to introduce -- I don't know whether you can see all of us or not. Can you see all of us or not -- can you open the camera? Can you see -- anyone from the audience can confirm if you can see all of us or only myself, please.

We can only see you, sir.

Okay. So because I have a system issue -- the screen. But next to me is Mr. Jiang Tao. He is the acting CEO, and he is now almost in his 6 months in the company. Prior to Jiang Tao, there was another gentleman who just moved out, Mr. Yaping. And now the gentleman comes to Oman -- the drive. With that, we have a young fellow who is also strategically poised to take the dimension from an achieving of green to a better green performance overall. I'll leave Jiang Tao to welcome on the sales statement, please.

Okay. Good morning, everyone, and [Foreign Language]. It's a honor to attend this meeting. And from the December last year, I'm the acting CEO of the OCC Company. And I -- before I worked in Huaxin Group for more than 16 years, and I'm responsible for the like the concrete business and also the eco business. So I hope that my experience in Huaxin Group can benefit for OCC in the future because now that -- before that, we just focus on cement business, but we have a big potential like in eco business that -- because after Huaxin came that we also negotiated the government authority that we want to push the eco business. We want because we have enough experience about the MSW pretreatment and coprocessing. We have more experience about the hazard waste coprocessing. And also that we did the integration of the cement business. We did the aggregate, we did the ready-mix concrete. So I hope that in the future that the OCC, we also can integrate our cement business and to implement to expand our business in the future to get more performance.

Thank you, Jiang Tao. So we leave the floor for the Q&A, and we are all [indiscernible]?

Any questions?

I have a couple of questions. I'll start with what you mentioned regarding the competition. So we have seen some -- the competition growing fierce by the time. And now with the export markets in the region limiting, do you expect dumping from regional players into Oman to increase? And how do you see the competition overall now and going forward?

So if we may take this into 2 dimensions, one is prior to the geopolitical tension and strike on Iran and then post whenever started. Prior to that, this kind of flow is continuously coming. And we see this is also still to be continuous of risk and it's among those top 10 risk on our radar. And we are tapping with all the stakeholders, among which the authority to see how this kind of supply to demand could be balanced in the country, wherever not Oman Cement per se, but all the cement producer came across and also putting this concern on quality measures on imported uncontrolled quantity that also being quite unfairly or not level play ground being brought to the country. So this has been taking the traction and now with the authority to see how it moves. This is on the phase before the tension starts. Now once it comes to the tension versus triggered, we see sluggish imports coming from the port of Suez once it comes to the Iranian across sea but UAE is still going and moving their cement to Oman, but not as per that huge quantity. So if the tension continues, maybe it might be one of those good years like in 2022, whenever the Ukraine-Russian war has caused the fuel prices and the supply chain and the logistics disruption increasing all the cost elements made the Oman Cement the saver among the other players to supply whatever domestically comfortably available rather than banking on other people who doesn't help during the stress time and lift the country to its own people to suffice the demand because once it comes to the commercial, if it is better for anyone who is outside the country to get a good premium on each tonnage, they would go after it being commercially driven. However, while we are still commercially driven, we have a kind of a national patriotic pact to suffice the local demand to the level best of available capacities. And accordingly, our shareholders and the Board itself, they have moved into more of debottlenecking and enhancement of the capacities, among which we've already spoken about 10% increase in last year and then also some kind of tweaking happening this year that might give us that kind of advantage of 5% to 10% additionally. However, if there is a significant huge demand happens, which is collectively is not attended by all the cement producers, then we would go to the Board and shareholders, and we say it's the right time to invest. The beauty of the new strategic partner and the way that they drive the business and the efficiency also, which has already been in place during review of the governance, we can get things done in no time. So there's a compression of the time lines to get things done if need beyond CapEx and also growth and additional capacity to be made available for the country. Any other question?

We have some questions in the chat. [indiscernible].

No, the chat come later, but anyone who would have any interacting [ Sakuro ] is still there?

Yes, I'm still here.

Any other additional question or we are done. So at least you allow others.

Yes. I have a couple more questions, if you allow me. So from what I understand from your conversation, you mentioned that the competition was already there, but now because the prices are high, you might see -- you might find increase in prices for your products as well. But as you are committed to provide to the local industry first, you guys will not capitalize on that as much. Is my understanding correct?

No, your understanding is incorrect. Our understanding of all commercial entities are driven by the market forces, but we will not be as I would call it leaving the support to supply to demand of the local market like other outside of the country invaders or players whom if they got the advantage to see it in other countries, they will not come and continuously supply whatever they used to be supplying before to sustain supply to Oman. So no one is going to help the country other than the people who are there and available in place. This is mainly the statement on the disruption that might happen and has happened in 2022 as we've seen that no one has really came to give from their chase of margin and cut to help the country to bring considerable reasonable price clinker or cement to support the delta on the demand.

Perfect. My next question is regarding your issue with the natural gas and your -- if I remember correctly, you guys had mentioned on previous calls that you are on the -- in the talks with the regulators to allow you to use coal as fuel instead of the gas requirement that you currently have. Has there been any progress because gas obviously is expensive and it makes you less competitive?

No, on decarbonization initiative, coal was only a very -- I will not call tertiary, but maybe a fourth line of option. But currently, we are having fossil fuel driving the energy on the kilns, which is based on natural gas. And due to the escalation of the prices also year-on-year and also for 2026, there is a huge jump on the cost, which we will speak about it in Q1. The impact is around 11% increase. And our kind of commitment in the decarbonization, we are tapping on all elements, starting from the time which you are aware about the tire ships or the TDF, which we have it available and we invested around $5.4 million, and it's being used for other purposes other than the tires because tires issues in the market was a bit of complicated and made not fully available. So we are entering into alternative fuel, I would call it, site agreements in order to continue to find replacement of natural gas, among which we have this -- we've spoken and it's already declared in our reports, the MSW RDF. This MSW RDF, we are in a bit of advanced stage, which we have spoken about it last year. And if things move right, then the new JV would come right to the life inshallah, hopefully, in Q2 latest. If there is any change or development which warrant different statement or update, we will give you that highlight as well. But that will definitely help into a sizable reduction on the natural gas, which would allow the country also and the IGCs and other [ MEM ] and the Ministry of Finance to redeploy this kind of saving vehicle to better creating value supply. This is once it comes to the fossil fuel. A coal is not tabled as of now in the immediate requirement. But since the competition comes across regions based on coal, their fuels are based on coal, which is currently trending in the between $70 to $90. In 2022, was it hitting to almost like $460, $470 or so from the range of $60, $70, $80. So -- if the coal still continue to be quite low, then it could be probably locked at if the resource is available in the country and if the permission is obtained to use it in the country per se in the cement industry. But our drive is to use MSW, other alternative fuels, green bulks, whatsoever available in the country, and we are moving forward. We have invested in the TDF, what we call project. We have invested in one waste bucket elevator for K1 in 2025. And we invested also in buying shredder, which is available from Europe, which is utilized for this specific cost. As well, we are moving aggressively. We created a department mainly we call it alternative fuel or alternative energy. And the team, we have structured them well with consultants and support from the group wherever now they are questioning on the market on whatsoever alternative fuel components that could be brought to use them as an energy sources. And this is an ongoing exercise, and we'll keep you updated as we go quarterly. So, clear, any other -- let's have another final question from your side before we go to the next audience, please.

Yes, sure. And my final question is just a question of basic understanding. If there were an expansion, a greenfield, if someone were to invest in a new plant here, what would be the cost per dollar per ton of a new plant if hypothetically one were to invest here as of now?

It depends. Now if you are trying to find an intel on how best our Chinese shareholders and the bidders once it comes to the putting a plant, it depends, first of all, on different variables. One line is about the fuel swing abilities or feed to that specific plant. The other side, it depends on the availability of raw materials and proximity of those raw materials because logistics and transportation is one line and also on the technology adopted, whether it's using that bore roller mill or vertical roller mill and whether they are adding on top of each of those one also decarbonization components like the WHR waste heat recovery or not. But in essence, if I go back to my previous, and I would refresh this from 2023 -- 2022 and 2021, for 5,000 ton at the highest peak, 5,000 ton in Sahawa would have costed me roughly around $200 million for 5,000 ton production. However, the market, if I capitalize now on a very competitive aggressive availabilities in the bidding side, maybe you'll find it lower than that by sizable, sizable millions dots.

Right. That's 5,000 tons a day, it's 1.8 million a year, right, capacity?

Roughly.

Any other questions from the audience?

Yes. So let's take the question.

Moving to the question in the chat box from [indiscernible]

Yes. So what is the question? Read the question.

Regarding the Mondi of Oman and sea profit has declined roughly around 67% in 2025, and he would like some clarification on this decline percentage.

So let's have an interactive. I have my financial controller, who is also following on this the team. So Manish.

So good morning to all of you. In fact, our Mondi, they -- because of this euro appreciation compared to the dollar, and they are net payable in terms of euro, they have taken a hit of this ForEx. This is the major reason why their profit has come down compared to the last year. And by the way, this calculation is not correct, 67%. It is less than 53% decline compared to the last year.

So the preliminary, if I take this slide, it's mainly an FX and the volatility and the change of the euro, which has on their appreciation has end up impacting the profit and the associate share that we receive on the dividends. Clear? Thank you. Next?

We have another question from [ Mr. Mukesh ] asking that in 2025, production was at 2.96 million tons. What is the current clinker and cement capacity? What is the planned CapEx and expected capacity utilization?

So in 2025, while it was rough of 3 million tons, we are targeting a 10% increase if market sustain the demand to continue. However, this 10% increase, it depends on the factor of the competition as well and how we justify the balance between the volume and the price because honestly, we have adjusted the price positively to offset the major exogenic uncontrolled cost drivers, among which we've spoken about in the comparative that 2025 loaded with almost 1.2 million tons increase to the lease rental and comparable to 2024, and this will be carried forward. The other element, which is also the 3% escalation year-on-year once it comes to the manpower, and we are almost in the range of 75%, 74% Omanization. And on top of this, also the 3%, which is inherently positively slopped as increased costs year-on-year for the natural gas. So -- and complicated with the additional 11% increase on the natural gas due to the change of formula from the calculation from the lower heating value concerned to our gross heating value, which loads another 11% additional cost to us. So this is how we will balance our move once it comes to the production to sustain the delivery of supply to the demand and taking a balance of those different factors. On the CapEx, we have planned CapEx, we will not go and maybe I have already reflected in [ Sakuro's ] discussions on the CapEx. We will not go heavy investing on multiple huge hundreds of thousands of tons made available unless the demand is sustainably proven requiring that specific supply. This is one part. The other part, we are continuously doing the debottlenecking. And we did it last year with the clinker cooler, which gave almost 10%. We have other kind of modification we want to do in this year. And the team is working concurrently on bringing this between 5% to 10% additionally. We have other projects, which we -- maybe Jiang Tao has in his opening statement, speaking about other stream of revenues, which is very promising if things move right. And this stream of revenues will be both from a construction material company per se coming from the upstream, the raw material. So aggregate by all type could be locked in after we finish our feasibilities and verification, and we get the approval from the shareholders. This can be a good tick. And the other addition to that, then going on to the midstream on the RMC, that also one line that we are looking to bring it life if things move right, and we have put a provisional budget for it. So all of these are considered in 2026. And hopefully, it can be delivered before the Q3 ends. Other questions?

Mr. Mukesh, second question, he has -- possible fallout of the current geopolitical tension could go to real estate demand in UAE, which will result in lower sales of [indiscernible]. This might lead to more exports to Oman. Do you think that the realization of Oman cement will come down in near term due to this and there will be a pricing pressure? Are there any planned shutdown during this year?

Yes, there is some planned shutdown even I think towards the end of this month, we will have one maintenance shutdown. And these are already robustly on our rosters or the plan for the year, taking this later question as first. Once it comes to shift in the geopolitics, honestly, this uncertainty is not really guaranteed that it might come or being quite predicted right. So what's happening with these tensions, we do this what-if scenarios, and we play our kind of readiness plan. So among this for the NSR realization per se, we have adjusted specific products prices reasonably to stand in the money for keeping good margin on those products. And we are repositioning some of the products differently. On the green decarbonization concept, and we are looking into a more of also shifting the philosophy from a specific ordinary of 42.5 strength cement produced to maybe a better quality in a 52 plus strength. And that per se, it can give an advantage of margin adjustment and also give the end user or the mid-users a possibility to use lesser of the quantity with the abundances of other mixes to create good margin for them as well. Next?

Any further questions through chat or any of the participants would like to add any other questions?

Okay. So yes, I will answer the last in the event of the shutdown, what would be the typical duration of downtime in terms of number of days. So that because of the capacity of our [indiscernible] is different. So K1 and K3. K1 now, we -- so after [indiscernible] that we increased the capacity a lot from K1 that before is around 2,200. Now it's around 3,000. And we hope that every year for K1, we need 2 planned shutdown. One is short term. Short term means that maybe 10 days and another one may be a long short shutdown, maybe around 15 to 20 days. So we hope that like the K1 and also the K3 that every year, we have the 2 planned shutdown, one is short term and one is the long term. And for K2 because it's just focus on the other kinds of the cement, clinker and cement is for the SRC and also for OWC and CWC. The capacity of K2 is not very high. It's around 1,500 or 1,700 per day. So we hope that every year, we only -- for K2, we only have one long shutdown, maybe 20 days around this.

Hello. Any other questions from your side? Dear participants, dear audience, any questions? Because I cannot hear you if anyone speaks. Anyone? No one? So we assume with that, that we close the session, sorry. Yes, which one?

We have question around [indiscernible] assets recorded in 2025. Could you elaborate on the nature of this adjustment?

Yes. In fact, our -- this lease rental, which earlier we were paying around OMR 76,000 per annum. Now it is almost OMR 1.2 million per annum because of this rental change agreement, this modification of lease has come around OMR 10 million, both in our right-of-use asset and lease liabilities in the balance sheet. I hope this is clear to you.

So this is whatever we told about it earlier, one line that we need to adjust our kind of trending price to offset this kind of exogenic uncontrolled variables as we've highlighted earlier. Among this, the lease rental charges increased and also this kind of natural gas adjustments upwards and then the manpower 3% increase year-on-year. Any other question, please? [Operator Instructions] We wish you all the best, and we wish also Oman Cement to be in a good 2026 performance and that all mankind stay in peace and this kind of distress attention gets stemmed out in no time. With that, we say thank you, and have a great day. Thanks. If you still have any questions, you can still contact us either contact as shown here and we are available. My contact is also available on the slides to the bottom. And we say thank you.

Thank you. Bye-bye.

Thank you. Bye-bye.

Thank you Jiang Tao. Thank you, Manish. Thank you all of you guys.