Positive outlook for Saudi Steel Pipes

SSP_Positive_outlook

Saudi Steel Pipes (SSP) Q2 2011 preliminary results were announced on 17 July 2011 and showed that the company's net income had fallen since 2010  hitting US$5.67mn in 2011.

The company’s net income was in-line with NCB Capital’s (NCBC) expectation of US$5.70mn. However, net income declined 15.1 per cent YoY due to lower sales volume, according to the report by the Saudi bank.

Net income declined 15.1 per cent YoY, but in-line with NCBC estimate

Q2 2011 net income came in at US$5.67mn, a decrease of 15.1 per cent YoY compared to the US$6.71mn in Q2 2010. The company attributed the YoY decline to lower sales volume off the back of decreased demand for medium diameter pipes.

Operating income slightly below estimate

Q2 2011came in at US$5.65mn slightly below NCBC’s estimate, at US$5.78mn. Q2 2011was a decrease of 16.1 per cent YoY (US$6.74mn in Q2 2010).

EPS

Q2 2011 came in at US$0.11 in-line with NCBC’s estimate. Q2 2011 was decrease of 15.3 per cent YoY (US$0.13 Q2 2010).

Although the company reported weaker results on an annual basis, NCBC argues that SSP should start benefiting from announced contract wins, as well as potential projects in the second half of 2011.

NCBC is currently Overweight on the company but the outlook is positive given the benefits from awarded contacts which are expected to positively impact results in second half of 2011.

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