Saudi Arabia's Ma'aden Q2 profit tumbles more than 90%

August 13, 2023 (MLN): Saudi Arabian Mining Company, known as Ma'aden, said on Sunday its second-quarter profit tumbled more than 90% on lower sales prices and higher expenses as it flagged a mixed outlook for its products, as Reuters reported.

Ma'aden posted a net profit of 350.9 million riyals ($93.53m) in the second quarter, down 91.3% from just over 4 billion riyals a year prior, the firm said in a stock exchange filing.

That missed analysts' average estimate of 577.6 million riyals in net profit for the second quarter, according to Refinitiv data.

It was also 16.3% below Ma'aden's first-quarter net profit of 419.4m riyals.

The fall in profit was due to lower average realized sales prices for all products except gold, higher general and administrative costs "including expected credit loss allowance by 40%," exploration and technical services expenses rising 116%, an 86% increase in finance cost due to higher interest rates and profit from a Ma'aden joint venture dropping 59%.

Also contributing to the fall was the Islamic tax "zakat, income tax and severance fees expenses (rising) by 2%," Ma'aden said in the filing.

The fall in profit was despite higher sales volumes for all products except ammonia, primary aluminium and flat rolled products, a 6% fall in the cost of sales due to a decrease in raw material costs - partly offset by higher production costs, 17% lower selling, marketing and logistics expenses, higher income from deposits and a 164% rise in other non-operating income.

"We are beginning to see an improvement in raw material pricing and, despite the challenging market environment, remain well placed to meet the growing long-term demand for our products," Ma'aden Chief Executive Robert Wilt said in a statement.

The realized price of ammonia averaged $253 per metric ton in the second quarter from $643 in the first quarter. Ma'aden expected prices of ammonia to remain stable in the third quarter "as supply tightness continues to provide marginal upside."

It sees the phosphate market stabilizing in the third quarter on strong demand in the Americas and a mixed outlook for aluminum due to soft demand in some markets.

Ma'aden sees gold trading in its current range for the rest of the year and raw material prices continuing to ease, "supporting profitability."

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