RIYADH: Saudi Arabian Mining Co (Ma’aden), the Gulf’s largest miner, beat analysts’ forecasts despite posting a 51 percent fall in second-quarter net profit on Monday, as sales revenues declined on low commodity prices. The firm made a net profit of 132.5 million riyals ($35.3 million) in the three months to June 30, it said in a bourse statement. That compared with a profit of 270 million riyals in the corresponding period of 2015. The average estimate of three analysts polled by Reuters was for a quarterly profit of 127.8 million riyals.
Ma’aden attributed the quarterly profit fall to lower commodity prices for its ammonium phosphate fertiliser, ammonia and aluminium products. Sales revenues declined by 15 percent compared with the same period last year, despite higher sales volumes of aluminium and gold, the firm reported.
The impact on profitability was partially offset by an 11 percent reduction in cost of sales, it said. Ma’aden is a key pillar in Saudi Arabia’s plan to diversify its economy away from hydrocarbons, which aims to have the mining sector contribute 97 billion riyals ($26 billion) to GDP by 2020. The firm had reported a loss or falling profits in the preceding four 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, which will reduce Ma’aden’s profit in 2016 by around 120 million riyals, the firm has said.
Ma’aden announced in April that commercial output at its Ad Duwayhi gold mine in western Saudi Arabia had started, with full capacity expected by the end of 2016. However, production and sales of gold were still boosted 36 percent and 58 percent respectively to 60,000 and 63,000 ounces, versus the first quarter of 2016. Its copper joint venture with Canada’s Barrick Gold Corp also began commercial operations at the end of June.
