Saudi Arabian Mining Company, one of the Gulf's biggest miners, said its first-quarter net profit plunged nearly 81 per cent annually as cost of sales rose and average selling prices of all products except gold fell.
Net income for the three months to the end of March slumped to 419.41 million Saudi riyals ($111.84 million), Ma’aden, as the Riyadh-listed company is known, said in a filing on Monday to the Tadawul stock exchange, where its shares are traded.
The net profit was affected primarily by a one-off utilities charge and higher raw material prices, the company said.
Revenue for the January to March period declined nearly 10 per cent to 8.05 billion riyals. Gross income and operating profit declined by more than 59 per cent and 71.4 per cent, respectively.
Cash generated from operations reached 2.99 billion riyals.
Long-term borrowing and net debt declined by 2 per cent and 5 per cent, respectively, from December, which helped strengthen the company's financial position.
"In the first quarter, we increased production and sales volumes in our core phosphate business unit and delivered another period of strong cash generation," Robert Wilt, chief executive of Ma'aden, said. "This was despite softer commodity prices, which impacted our top-line performance and profitability compared to last year.
"We continue to make good progress to optimise existing operations and bring new projects online."
Ma’aden, which is majority-owned by the kingdom’s Public Investment Fund, is central to Riyadh’s economic diversification strategy. The expansion of the industrial and mining sectors is one of the main objectives of the kingdom's Vision 2030 agenda, which positions mining as a third pillar of the economy.
Under its new corporate strategy, Ma'aden aims to grow tenfold by 2040 and to move into strategic minerals to fuel the growth of downstream industries in Saudi Arabia, the Arab world’s biggest economy.
Ma’aden this year teamed up with the kingdom’s sovereign wealth fund, the Public Investment Fund, to pursue global mining investment opportunities.
Last week, it signed an agreement with Vancouver's Ivanhoe Electric to purchase 9.9 per cent stake in the company for $126.5 million. As part of the deal, Ma'aden will acquire nearly 10.2 million common shares in IE.
"We are building on our joint venture with the PIF to invest in global mining assets and formally partnered with Ivanhoe Electric ... the expanded joint venture with Barrick Gold finalised earlier this year is progressing well and these strategic partnerships demonstrate our commitment to developing the Saudi mining sector and maximising long-term value for shareholders," Mr Wilt said.
Ma'aden's general and administrative expenses in the first three months of the year rose by 15 per cent compared to the same period last year, while exploration and technical services expenses jumped by 129 per cent during the same period.
The company reported a more than 87 per cent jump in its full-year 2022 net profit to 2.13 billion riyals, boosted by higher sales and higher average prices of its products.