Q1 profits crash at Mohammad al-Mojil Group

DEPRESSED DEMAND: Q1 profits slump at MMG after weak demand and delayed projects. (Getty Images)

Saudi-based Mohammad al-Mojil Group (MMG), a contractor specialising in oil and gas projects, said net profit fell 96 percent in the first-quarter as several projects hit delays amid depressed energy demand .

MMG made 5.4 million riyals ($1.4 million) in the three months to March 31, down from 143 million riyals a year earlier, it said in a statement posted on the Saudi bourse's website.

"The decline ... is due to the delay in receiving requirements of projects, which has affected the pace ... of these projects," MMG said.

"This has resulted in an increase in costs and provisions and a decrease in profit margins, in addition to the implications of the economic changes in general," it added.

Earnings per share fell to 0.05 riyals from 1.43 riyals, although revenues rose 18 percent to 800.7 million riyals, said MMG, which also caters for petrochemicals projects.

MMG had 3 billion riyals worth of projects by the end of March, it said.

Oil's slump to around $50 a barrel from a peak over $147 last year has forced cost-cutting across the industry, and contractors who were turning down work a year ago now find themselves in fierce competition for what is left, industry sources say.

Saudi state oil giant Aramco has sent bidders back to the drawing board for several large projects to expand capacity in the kingdom.

It has delayed an $8-billion plan to expand capacity by 400,000 barrels per day at its Ras Tanura refinery, industry sources said earlier this month.

Aramco has also delayed two other 400,000 bpd refinery projects at Jubail and Yanbu as it wants contractors to revise prices to reflect the slump in the cost of raw materials since the global economic slowdown took hold. (Reuters)

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