BNR – Saudi Arabian Mining Company, Ma’aden, has announced a significant dip of more than 90% in Q2 profit.
Lower Sales Prices and Increased Expenditure Impact Q2 Profits
The company attributed the decline to a complex interplay of lower sales prices and increased expenditure. However, it remains determined to navigate through a mixed outlook for its product offerings.
Ma’aden unveiled a net profit of 350.9 million riyals for Q2. This is a stark decrease of 91.3% compared to over 4 billion riyals the previous year. The announcement fell short of analysts’ expectations, which had placed the estimated net profit for Q2 at 577.6 million riyals.
Several factors converged to influence this sharp profit decline. Ma’aden pointed to lower average realised sales prices for most products, excluding gold, coupled with increased general and administrative costs. This includes a projected credit loss allowance rise of 40%.
Exploration and technical services expenses witnessed a 116% surge and finance costs inflated by 86% due to heightened interest rates. Additionally, profit from a Ma’aden joint venture slumped by 59%.
Additional contributors to the profit slump included Islamic tax-related expenses, such as Zakah, income tax, and severance fees.
Ma’aden Strategy Amidst Profit Decline
Despite these challenges, Ma’aden emphasised its resilience and strategic positioning. The company noted an improvement in raw material pricing. It also expressed confidence in fulfilling the sustained long-term demand for its diverse range of products.
The second quarter saw fluctuations in ammonia prices, averaging at $253 per metric ton compared to $643 in Q1. Ma’aden anticipates ammonia prices to stabilise in Q3, projecting stable gold trading within its current range throughout the year.
The company further envisions raw material prices easing further to bolster profitability. Also, the phosphate market may find balance in the third quarter, propelled by robust demand in the Americas.
Ma’aden’s Chief Executive, Robert Wilt, remained steadfast, highlighting the company’s readiness to adapt and thrive despite the challenging market conditions.
