Earnings Report

National Cement Company

H1 26

1. Company Overview & Earnings Context

National Cement Company (Public Shareholding Co.) is a Dubai Financial Market-listed cement producer. Its principal activity is the manufacture and sale of cement and cement-related products, with all company sales during H1 2026 generated within the UAE.

National Cement delivered a strong improvement in its core cement operations in H1 2026, with revenue increasing 38.9% YoY to AED 152.0 million and operating profit rising sharply to AED 31.4 million. However, lower dividend income from the company's investment portfolio resulted in overall net profit declining to AED 109.0 million.

2. Financial Performance Snapshot

Revenue: AED 152.0 Million (+38.9% YoY)
Gross Profit: AED 43.8 Million (+287.0% YoY)
Operating Profit: AED 31.4 Million (+773.3% YoY)
Profit Before Tax: AED 112.1 Million (-33.8% YoY)
Net Profit: AED 109.0 Million (-35.2% YoY)
EPS: AED 0.30, vs. AED 0.47
Operating Cash Flow: AED 50.8 Million (+80.2% YoY)

The contrast between significantly stronger operating profit and lower overall net profit reflects the company's substantial investment income outside its core cement business.

3. Operational Highlights & Key Metrics

National Cement's core cement business showed a significant improvement during H1:

Cement Revenue: AED 152.0 Million (+38.9% YoY)
Cement Segment Profit: AED 29.1 Million, vs. AED 1.4 Million
Direct Costs: AED 108.2 Million (+10.3% YoY)
Material Costs: AED 66.7 Million (+23.1% YoY)
Investments Segment Profit: AED 83.1 Million
Financial Investments: AED 2.34 Billion
Total Assets: AED 2.97 Billion
Total Equity: AED 2.86 Billion

The company's balance sheet remained heavily weighted toward investments, with financial investments representing the majority of its total assets.

4. Key Performance Drivers

The standout development was the improvement in the core cement operation. Revenue increased by nearly 39%, while direct costs grew by only around 10%, driving gross profit from AED 11.3 million to AED 43.8 million. As a result, operating profit increased from just AED 3.6 million to AED 31.4 million.

The investment portfolio remained the largest contributor to overall earnings, but its contribution declined substantially. Dividend income from equity investments fell to AED 79.3 million from AED 154.5 million in H1 2025. Finance income also declined to AED 7.7 million from AED 10.4 million.

This decline in investment income explains why net profit fell despite the significant improvement in National Cement's underlying cement business.

5. Balance Sheet, Cash Flow & Dividend

National Cement maintained a particularly strong equity position at the end of June:

Total Assets: AED 2.97 Billion
Total Equity: AED 2.86 Billion
Total Liabilities: AED 106.0 Million
Financial Investments: AED 2.34 Billion
Bank Balances & Cash: AED 45.5 Million
Loan Receivable from Associate: AED 288.2 Million

Net operating cash flow improved to AED 50.8 million, compared with AED 28.2 million in H1 2025. The company also generated AED 49.0 million of net investing cash flow and paid AED 89.7 million in dividends during the period.

Shareholders approved a 25 fils per share cash dividend for FY2025, representing a total distribution of AED 89.7 million, compared with 20 fils per share for the previous year.

6. Investor Takeaway

National Cement's H1 2026 results present two contrasting trends. Its core cement operations strengthened considerably, with revenue up 38.9%, gross profit almost quadrupling and operating profit rising more than eightfold.

At the same time, overall net profit declined 35.2% because dividend income from the company's large investment portfolio nearly halved compared with H1 2025. The company's earnings therefore remain meaningfully influenced by returns from its financial investments.

One point investors should note is the AED 288.2 million loan receivable from an associate, Berber Cement Company in Sudan. The associate has defaulted on several payments, and the external auditor issued a qualified conclusion because it was unable to obtain sufficient evidence regarding the existence and accuracy of this balance.

Key areas to monitor in H2 2026 are continued cement revenue growth, operating margins, dividend and investment income, performance of the AED 2.34 billion investment portfolio, and developments surrounding the associate loan receivable.