Saudi Arabian Mining Company (Ma’aden), the Gulf’s largest miner, posted a 35.3 per cent fall in first-quarter net profit on Sunday, but still beat analysts’ forecasts.
The firm made a net profit 168.9 million Saudi riyals in the three months to March 31, it said in a bourse statement. This compares with a profit of 260.9m riyals in the corresponding period of 2015.
It attributed the results to a 17 per cent drop in revenues because of lower commodity prices for all its products – year on year, average prices for ammonia and DAP dropped 30 per cent and by 25 per cent for aluminium, where overall sales also fell.
This negative impact was partly offset by a 16 per cent reduction in cost of sales through lower raw material costs and the impact of an ongoing initiative to cut operating expenses.
In October, Ma’aden’s chief executive told Reuters his firm was reviewing its spending in the wake of low commodity prices.
Ma’aden, which operates in gold, aluminium and phosphates, is a key pillar in Saudi Arabia’s plan to diversify its economy away from hydrocarbons.
The firm had reported a loss or falling profits in the preceding three quarters on lower products prices but it has weathered tough conditions better than some of its global peers because it has low production costs.
This advantage has been eroded somewhat by changes to energy and gas feedstock prices announced by the government in December: this would reduce Ma’aden’s profit in 2016 by around 120m riyals, the firm has said.
business@thenational.ae
Follow The National's Business section on Twitter