Saudi Ceramics, a leading provider of ceramic products such as tiles and sanitaryware, said its revenue for the first three months of the year surged by 12 per cent to hit SR440 million ($117 million), beating analysts' expectations of SR417 million ($111 million) by 5.6 per cent.
 
The revenue growth was mainly led by the price hike (in tiles segment) and volume growth across the segment, said the report by Al Rajhi Capital, a leading financial services provider in the kingdom.
The higher operating income and lower finance cost, at the back of debt reduction, resulted in more than 6 times the growth in net income to SR71 million, stated Al Rajhi, adding that it was better than its estimate of SR47 million.
The improvement in capacity utilization especially in sanitary ware and tiles led to an improvement in operating leverage and thereby gross margin by 1170 bps to 33.5% in the first quarter compared to 21.8% in Q1 last year and 26.3% in the previous quarter.
 
"We remain bullish on Saudi Ceramics as we witness strong demand stemming from mortgage projects, PIF backed projects and other giga-projects," stated Al Rajhi Capital in its review.
"We see further room for price increase of tiles as cheaper imported inventory gets depleted in few months which should lead to margin expansion. Added to this, the steps taken by the company to reduce its leverage are also likely to lower its finance cost, aiding further improvement in profitability and dividend," it added.-TradeArabia News Service

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