Raysut Cement Company SAOG ($RCCI)

Great. So good evening, and welcome to your platform, which is the investor and analyst meet for the financials and the financial performance of the company for the year ended 31 December 2025. This is a brief before we kick off, and I have a couple of introductions as well. So 2025 has been an inflection as we are concerned, we've shown strong revenue growth, strong EBITDA improved EBITDA operational stability across our plants. And I'm very proud to say that the group achieved its first profitable quarter after 6 years in Q4. I'm sure all of you had a chance to have a read of the Board of Directors' report and the MD&A. It captures a lot of what I'm actually summarizing for you. So essentially, this is not a one-off performance. It's a disciplined outcome of a lot of hard work in our turnaround strategy, focusing on ops excellence, tighter cost control, margin analysis and needless to say, our pricing strategy since October. The business has become a lot more focused and now. Our revenues and cash flows are far more predictable and reliable versus earlier. So that should give confidence to all our stakeholders, including our suppliers, our bankers, our employees, our customers, everything is leading to strengthening the foundations of the business. This is your platform. We would like you to participate as much as you want. Management is at your disposal. All said, I cannot ignore the global uncertainty that prevails in the region and the larger world. It has had its impact on supply chain. It had an impact on certain logistics hubs that we use, shipping routes, raw material availability, meaning you would know everyone probably knows as much as I do about what's going on in the region. And to that I will now stop. It's been a great year. We've uploaded our Q1 premier results. So I don't know if you've had a chance to look at that. That shows a more promising story and essentially a continuation of our momentum from Q4 to Q1. And with much -- not much further ado, I'd like to introduce to you, Mr. Salim Abdul Kader, our new CEO who comes with the wealth of experience in the cement industry, having worked at multiple geographies with a lot of credibility and turnaround and turning around businesses. So I'll let him say a few words, and then we'll open the floor to you because it's your meeting, not us.

Thank you, Raashid and thank you, gentlemen, and is there any ladies there as well, I can't see from the name, but I'll be remiss if I said -- if I made mistakes in comments, at this stage. It's been certainly an exciting foray to Oman and into Raysut Cement, having joined under 2 months ago, formerly CEO. But I was fortunately not prior to that, to have a stent for about 2.5 months as Board adviser, so we have got to meet the team, the people who are seeing around the table who helped me navigate through the complex markets that we found ourselves in, in 2025. And I was fortunate enough to see the turnaround in the last quarter of 2025. I think our CFO, Mr. Raashid Ali has been very too modest. It was a hockey stick turnaround performance on which the platform was laid in Q4 of 2025 from the optimization that you saw or hopefully, in Q1 2026. We remain optimistic -- cautiously optimistic at this stage, given the macro global scenario, as Raashid Ali appointed to earlier on. And we certainly don't want to count our chickens before they hatch. At this stage, we believe our operational strategy is on very solid platform. And on top of that, we will certainly look forward to building on our liquidity release and try to go forward step by step. It is a step-by-step plan. There is no magic dust. So there is no leapfrog. It's a conscientious effort to improve at all aspects of the business step by step as we move forward. I just want to emphasize that. With that said, thank you so much. If there's any questions, this is your platform. The team and myself will endeavor to answer to the best of our ability.

I'd also like to introduce Salman Malik would be part of the meeting, he manages group finance. And Salman, do you want to say a few words. Otherwise, we can dive right into the questions.

Yes. So I've been handling these sessions for a quite long time. And I'm very much positive about today, we've just submitted a financial performance for the first quarter 2026. And It's really a promising result, which you can see the turnaround from the loss there last year and to the profit. So we welcome your questions. Please raise your hand, so we will take your question to answer.

We'll keep the floor open for another minute. And if there are no further questions -- there is one question, Sandesh, please go ahead.

I have one question on the overall cement industry in Oman. Like I want to first understand what the capacity of ratio and what's the overall capacity in Oman, how the market dynamics for cement is in Oman? And what -- how are you seeing the -- like for 20 -- how as the cement sector transition from 2025 and what changes are you seeing in 2026, like an overall picture of the cement sector in Oman. I just wanted to understand that.

So from our market intelligence, the overall Oman cement market is 8.5 million tonnes, yes. Of that, we produce combined between Salalah and Sohar, we produce approximately [ 4.5 million tonnes ] and Oman Cement produce [ 3.8 million tonnes ], yes? And then the fragmented grinders and other smaller cement plants produce the rest. Now whether that number is sacrosanct, the answer is no. Is it our best estimate? The answer is yes. And the demand for cement in Oman continues to grow, not by double digit or anything, but it continues to grow. And earlier, we were -- we had a bit of dumping from the UAE and Iran, which started to decline towards October when there was a infrastructure and construction boom in the UAE. So a lot of product that was coming in has actually stopped coming to the Oman market. Now with the geopolitical situation and supply chain bottlenecks, also cement from Iran practically come to a standstill. So I see the demand increasing. At this point of time, that's all I can add.

Just to add to Raashid, I said we don't have a cement association or industry body that most other countries do. So the numbers are subject to our internal interpretation. And we are seeing a reduction in the importers, in the import sector of the market over the last 6 months, put a variety of macro and local demand reasons. And the issue with the Oman market demand is that it's difficult to translate the infrastructure projects that you see being announced in terms of cement demand. There is no direct correlation between the amount of infrastructure projects announced and the actual realization into a demand. But as we build our internal market intelligence system over the next couple of months, we plan to be able to fill those gaps with the right data.

Aamir, do you have a question?

I have a couple of questions. My first question is that what is the imported price of cement in Oman?

The price, Aamir varies. What intelligence we have is landed into Sohar port, it's just about OMR 17.8 per tonne. The product from the UAE, it differs from certain manufacturers. So the main companies that are bringing in product -- were bringing product to Oman were Lafarge and Union. The prices were pretty similar to what would be the landed price of Iranian cement at Sohar. It's between OMR 17.8 per tonne to OMR 18.5 per tonne plus than internal logistic costs.

In addition to imported cement, how much quantity was imported from Iran and during the current scenario, is the cement coming right now or...

So at the moment, we -- our information is that there's practically no cement coming in from Iran, but there's still cement coming in from the UAE. The number that we had, which is, again, please not to be quoted over the period of the year was approximately 1.8 million.

Okay. And what is the approximate demand of Oman, annual demand?

8.5 million based on our internal intelligence.

Okay. And one more question, if you allow me to ask. In current scenario, like you all know the price -- crude oil prices increased and Oman make a budget at USD 60 a barrel and they projected development budgeted lower than the expense last year. So the prices have gone up. And as per our estimate, maybe Oman post fiscal surplus during the current year 2026. Do you know -- do you view that the availability of surplus revenue, the expenditure on the development side by the Omani government may increase and it will help to create more demand for cement.

I wish it does, and I wish what you're saying happens, meaning ultimately, the largest spender in any country is the state. And if the state spends more, there's more for everyone, there's more work for everyone and it benefits the country. So not that I have any particular data about it, but I know there was a surplus, and I'm hoping what you're saying is absolutely right.

Based on -- we did an energy survey recently, and the data that we have is that if you look at the energy consumption, in Oman versus the oil and gas production levels. And you look at the production -- the supply and demand situation in Oman, we are in a very precarious position because very soon, we're going to have to start restricting local demand in order to be able to export. So I think there's going to be a shift in the energy landscape, irrespective of what's happened to the oil and gas prices, which is driven by the internal dynamics of the country's demand and supply scenario. And then if you add on top of that any benefit that comes in from the external hedged oil pricing, that will only be a positive for the country. So I concur with what Raashid said, but it's largely dependent on our internal dynamics in terms of supply and demand. And that's projected to grow at a rate of 4.4% based on the last economic metrics.

Sandesh, I saw you raised your hand again. Please go ahead.

Yes. I was just going through the results of for FY '25. So approx 30% of your company's revenues through export, if I'm not wrong. So I just wanted to understand the export market for red cement, like which all countries are there?

So typically, the export market that we have is neighboring countries where logistics costs are still well within where the product remains competitive. So from Zansibar to Somalia to Yemen to Chad, most of Eastern Africa is a market where the distances traveled aren't excessive. So those are the markets we export to under contract. You must have seen we disclosed our larger contracts on the MSX. So those are the markets that we go to.

Okay. Okay. Also, you mentioned about the imports coming from UAE and Iran, like dumping from UAE and Iran. Are there any plans like from the ministry, just like what happened with the ceramic sector where there was antidumping imports? Like could we see something that happening in the cement part as well?

I think I'll leave that to Salim to answer because we are in the process of forming what Salim referred to earlier is a cement association. And that association, once formalized, will lobby with the right ministries and undersecretaries to make sure that our point is put forward. And after that, it's the judgment of the state what they want to do. You're absolutely right. I think ceramic imports got taxed at, what, 160% or something from memory. And that actually has led the ceramic industry to blossom within Oman. So you're absolutely right.

So to add, the latest update on that is we're putting together a position paper which we're taking to the relevant ministries together with the other local producers, it has to be aid and a combined industry effort, okay? We have local channels to which we can take that. And then we have high tech, with our international channels, which we can position that should local efforts fail. The whole idea, the difficulty on these kind of cases is to make sure that we have a healthy balance between fair competition and unfair competition. We want to always encourage fair competition because that's part of our economic growth strategy for any -- for Oman and for the region, but at the same time, a unhealthy competition. And when you see the import parity between the cost of landed cement in Oman plus the cost of that same tonne being produced at the factory gate, that's when you'll understand the degree of unhealthy competition that we are facing. So yes, work in progress at the moment. And all I can say is watch the space.

Absolutely. And great positive answer. And Sandesh, to add to what Salim is saying is for our product to remain competitive, the industry will need to be protected because if I look at the UAE, the UAE manufacturing is coal-based, which is far more inexpensive than gas-based. And Iran earlier now that nothing coming through, gas is heavily subsidized to drive industry. So even with additional transport and logistics and multiple handling costs, product is still as competitive as Salim put it, competition is always healthy -- unhealthy competition creates pressure on the industry.

Okay. Also speaking on the gas base, which you mentioned, are there any plans or a CapEx for [ 2020 ], like going forward, like for an alternative fuel, like how Oman Cement also has in discussion with respect to alternative fuel. Are there any talks going on with Raysut?

So alternative fuel, the answer at the moment is no. In terms of -- we have a plan to start what Oman Cement has, as you mentioned, it's called waste heat recovery, where we harness the heat and produce x megawatts of power every month. So that should be commissioned hopefully by the end of the year. And even RDF. So refuse fuel as well. So both are working parallelly. So we are hoping to bring down our power cost by a few 60 or 50 by this thing to, in fact, make our product more competitive.

The whole thing about an alternative energy strategy is timing. I'm sure you guys would see by implementation in other industries that if you bring it at the wrong time, you will probably see the cost and not the benefit. So as Raashid said, we're looking -- we looked at WHR. It's already installed. The assets are ready to go. We just need to be able to do some maintenance and upgrade on the installed assets to swing that into motion. That can bring up to 25%, 30% savings. I'm not going to tell you on which part of the energy it will be. We still have to do our homework. And then alternative fuels, RDF, in collaboration with the municipality of Dhofar, which is around 2 kilometers away from where our plant is and with RDF if you have very good logistics and you have strong shredder and manufacturing systems, which is what we already have on site, we will be able to implement that. The issue, as I said, is with timing. If you bring it in where the benefit -- where the cost exceeds the benefit, it doesn't make sense. So we want to time the implementation of these projects at the right point of our energy optimization strategy. At the moment now, we have a lot of other initiatives like off-peak savings on the electricity side. And then on the thermal energy side in terms of optimizing the current assets in order to reduce thermal energy. So between thermal and electrical as per your normal and alternative energy will come in at the right stage of our plans.

Just my last question. You said that the capacity is 4.5 million tonnes, right, for Raysut cement. This is the total capacity?

Only in Oman. So we have a manufacturing plant in [ Duqm ] free zone, and then we have a packing unit in Maldives. So I'm not counting that because the question was Oman specific.

Yes. Okay. And what was the utilization for 2025?

Sohar was at 67% to 68% and the Salalah plant was at 86% to 87%. Aamir?

I have just a couple of more questions if you allow me. You just mentioned about the Waste Heat Recovery plant. What is -- what will be the capacity of this plant? And how much the electricity cost will be saved from this project?

I can't give you forward-looking information. The plant capacity is 9 megawatts. You can do the math yourself, but I can't give you forward-looking statement.

Okay. And the plant and Salalah and Sohar, are the same capacity?

Similar, similar. In terms of cement, yes. One is a very modern plant and one is a slightly older plant.

One is fully integrated and one is grinded.

Salalah is a fully integrated 3 kiln stage plant and so is the grinding units, cementing and grinding.

And Salalah is operating as maximum capacity you just mentioned it's 87%.

It's around -- in the high 80s. And Sohar is in the high 60s. We're trying to push as much as we can. Obviously, we're being helped by fewer imports from Iran and fewer dumping from the UAE.

And one more question. Sorry, I'm asking that. As you mentioned earlier that there's a big difference between cost of production of coal and gas and you are currently using gas in Oman. And is there any plan to convert your on coal in the future?

The state does not allow us to use coal. Our plants are both. They can -- they work on gas or coal, but they're not allowed by the state to use coal or...

Regulated markets.

Commercial usage of coal is not...

We'll give one more minute. And if there are no questions, then we'll close the meeting.

On behalf of myself, Raashid Ali and Salman, I want to thank you for participating, for joining in to hear what we have to say today for the questions that you've asked. And I hope we fielded that to your satisfaction. If there are any questions that you have post this meeting, and you would like to have that limited, please feel free to reach out to our usual platform in order to be able to do that.

Thank you very much. And thank you more importantly for your time and the quality of questions that you asked about the business. We will now see you after we closed 30th June, sometime in -- was the 12th or 13th of August. Thank you very much and good evening. Thank you. Stay Safe.