Sharjah Cement and Industrial Development Co

1. Company Overview & Earnings Context

Sharjah Cement & Industrial Development Co. (SCIDC) is an ADX-listed industrial company engaged in the manufacture and supply of cement, paper sacks, dry mortar products, plastic ropes and ready-mix concrete. The Group also invests surplus funds in securities, private equities and properties, with operations based in Sharjah and sales across the UAE and selected markets in the Middle East, Africa and Asia.

H1 2026 was a very strong earnings period for SCIDC, with revenue increasing to AED 485.46 million and net profit more than doubling to AED 77.40 million from AED 38.05 million. Management attributed the improvement primarily to higher sales volumes and lower production costs.

2. Financial Performance Snapshot

• Revenue: AED 485.46 million (+33.4% YoY)

• Gross Profit: AED 105.83 Million (+108.3% YoY)

• Gross Margin: 21.8%, vs. 14.0%

• Investment Income: AED 14.01 Million (-21.2% YoY)

• Profit Before Tax: AED 83.96 Million (+107.9% YoY)

• Net Profit: AED 77.40 Million (+103.4% YoY)

• EPS: AED 0.127, vs. AED 0.063

The standout feature was the significant improvement in core industrial profitability, with gross profit more than doubling despite weaker investment income.

3. Operating Performance & Sales Growth

SCIDC's revenue increased from AED 363.94 million to AED 485.46 million, driven primarily by higher sales volumes. Management specifically identified increased sales volume as the main reason for the improvement in turnover.

The majority of the growth came from the domestic market. UAE revenue increased to AED 469.55 million from AED 327.96 million, while revenue from outside the UAE declined to AED 15.90 million from AED 35.98 million. This means approximately 96.7% of H1 revenue was generated within the UAE.

Profitability improved even faster than revenue. Cost of sales increased 21.2% to AED 379.63 million, considerably slower than the 33.4% revenue growth. As a result, gross profit surged 108.3% to AED 105.83 million, with gross margin expanding from approximately 14.0% to 21.8%.

4. Key Performance Drivers

The most important earnings drivers were higher sales volumes and reduced production costs, according to management. These factors drove the substantial expansion in gross profit and ultimately helped net profit more than double.

Investment income, however, moved in the opposite direction, declining to AED 14.01 million from AED 17.78 million. Management attributed the reduction mainly to weaker fair-value performance of investments carried at FVTPL.

Within investment income, dividend income increased to AED 9.92 million from AED 7.70 million, and net rental income from investment properties increased to AED 4.24 million from AED 3.35 million. However, FVTPL investments recorded an AED 0.55 million fair-value loss, compared with an AED 6.29 million gain in H1 2025.

Q2 also remained strong, with revenue of AED 257.59 million and net profit of AED 39.91 million, compared with AED 185.94 million and AED 22.55 million, respectively in Q2 2025.

5. Balance Sheet, Investments & Cash Flow

SCIDC ended June 2026 with:

• Total Assets: AED 2.19 Billion

• Total Equity: AED 1.46 Billion

• Total Liabilities: AED 721.64 Million

• Property, Plant & Equipment: AED 949.80 Million

• Investment Properties: AED 232.95 Million

• Financial Investments: AED 257.72 Million

• Cash & Cash Equivalents: AED 101.84 Million

• Total Bank Borrowings: AED 456.50 Million

Cash generation improved significantly. Operating cash flow surged to AED 114.14 million from AED 21.32 million, while cash and cash equivalents increased to AED 101.84 million from AED 71.96 million at the beginning of the year.

The Group also invested AED 38.66 million in property, plant and equipment and paid AED 56.57 million in dividends during the period. At 30 June, SCIDC had AED 317 million of unused credit facilities, while its borrowing covenants were reported as being met.

6. Investor Takeaway

SCIDC delivered a strong H1 2026 operating performance, with revenue growing 33.4%, gross profit more than doubling and net profit increasing 103.4% to AED 77.40 million. EPS also doubled to AED 0.127. The most encouraging aspect is that the improvement was primarily driven by the core industrial business through higher sales volumes and lower production costs, rather than investment gains.

Margin expansion was particularly strong. Gross margin improved from approximately 14.0% to 21.8%, while Q2 maintained the momentum with net profit increasing approximately 77% YoY to AED 39.91 million. This suggests that the H1 improvement was not concentrated solely in the first quarter.

Cash generation also strengthened substantially, with operating cash flow reaching AED 114.14 million and cash increasing to AED 101.84 million. On the other hand, bank borrowings remain sizeable at approximately AED 456.5 million, while investment income declined during H1.

The independent reviewer issued an unmodified conclusion, stating that nothing had come to its attention indicating that the H1 financial statements were not prepared, in all material respects, in accordance with IAS 34. Going into H2 2026, the key areas to monitor are sales-volume growth, production costs and margins, domestic UAE demand, operating cash flow, borrowing levels and investment-income performance.