Saudi Arabian Mining Co (Ma'aden) reported its first profit rise in six quarters as cost reductions helped it to a 4.6 percent jump in third-quarter net profit, though Tuesday's numbers fell short of analyst expectations.
Ma'aden, the Gulf's largest miner and a key pillar in Saudi Arabia's plan to diversify its economy away from hydrocarbons, has weathered tough market conditions better than some of its global peers thanks to low production costs.
However, this advantage has been eroded somewhat by changes to energy and gas feedstock prices announced by the government in December as the kingdom seeks to reduce the impact of lower oil prices on its budget by removing subsidies.
Ma'aden made a net profit of 83.6 million riyals ($22.3 million) in the three months to Sept. 30, it said in a bourse statement, despite a continued buffeting from lower prices for its products, particularly phosphates.
While this compared favourably with the 79.9 million riyals in the same period last year, the average estimate of four analysts polled by Reuters was for a profit of 122.7 million riyals.
Ma'aden attributed the gain to a 10 percent drop in cost of sales as a result of lower raw material prices and continuing efforts to improve efficiency.
This helped to offset a 9 percent year-on-year drop in sales, which were dragged down by lower phosphate prices and reduced aluminium volumes.
A 20 percent increase in the average gold price, as well as increased output after its Ad Duwyahi mine started commercial production in April, helped to soften the impact.For all the latest industry news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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