Saudi Arabian Mining Co.’s (Maaden) fourth-quarter 2018 net profit of SAR 277 million came below Aljazira Capital and consensus estimates’ of SAR 454 million and SAR 391 million, respectively, the research firm said in an earnings review on Wednesday.
The weak quarter-on-quarter net income is attributed to rise in COGS due to an increase in raw materials cost; an impairment loss and increase of 15 percent in selling, general and administrative, and exploration services expenses.
"The deviation of Q4 2018 result from our estimate is primarily attributed to higher than expected COGS and depreciation after the commercial commencement of MRC and MWASPC during last December," the report added.
The mining major's revenue reached SAR 3.82 billion, in-line with the brokerage's estimates of SAR 3.75 billion.
"This we believe is due to improved quantity sold of ammonium phosphate
fertilizer, ammonia and aluminum; despite a decline in aluminum price," the report said.
Gross profit stood at SAR 1.13 billion missing the brokerage's estimates of SAR 1.35 billion, due to higher than expected increase in raw material and higher than expected depreciation expenses attributed to the new commercially commenced projects.
Aljazira Capital recommended "neutral" rating on the stock, setting the target price at SAR 53.0 a share.
"We expect the company to remain highly leveraged in the near to medium-term, limiting the company’s ability to pay dividend," it said.
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