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Saudi Maaden Seeks to Acquire Meridian Fertilizer Group

Saudi Maaden Seeks to Acquire Meridian Fertilizer Group
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Saudi Maaden Seeks to Acquire Meridian Fertilizer Group

Saudi Maaden Seeks to Acquire Meridian Fertilizer Group

Saudi Arabia's largest mining company, Maaden, seeks to complete the first global acquisition of Africa’s Meridian Fertilizer Group. The process is expected to be completed during the third quarter of 2019.

Maaden revealed that this step is significant in its strategy to build global distribution channels of fertilizers.

Separately, Maaden reported its financial results for the second quarter of 2019. The company recorded a net loss of SAR590 million (USD157.5 million) compared to a profit of SAR630 million (USD168 million) in Q2 2018.

The report added that the loss is mainly attributed to decreasing commodity prices, which affected the year-on-year profit by SAR481 million (USD128.2 million), and one-time costs associated with the restructuring of its Maaden Rolling Company (MRC) business which amounted to SAR159 million (USD42.3 million).

The company’s profitability was also affected by higher input costs, operating expenses including fixed costs, general and administrative costs, selling and marketing, and finance costs, caused by the full recognition of the operating costs of Maaden, Waad al Shamal Phosphate Company (MWSPC) and Maaden Rolling Company (MRC), which commenced commercial operations in December 2018.

Despite losses incurred in Q2 2019, revenue increased by 26 percent, reaching SAR4.3 billion (USD1.1 billion) compared to SAR3.4 billion (USD906 million) in Q2 2018. The increase in revenue resulted primarily from an increase in sales volume of ammonium phosphate fertilizer and aluminum flat-rolled products, as MWSPC and MRC reached full commercial operations.

Cash generated from operations was SAR545 million (USD145.3 million) in Q2 2019, up by 25 percent when compared to the previous quarter.

Maaden reported earnings before interest, tax, depreciation and amortization (EBITDA) of SAR1.3 billion (USD346.6 million), a decrease of 29 percent compared to the same quarter last year.

Among the factors influencing the financial data: an increase in power costs for its aluminum smelter due to the recognition of the full power cost of the Saline Water Conversion Corporation (SWCC) power plant, which supplies the smelter.

Commenting on the results, Maaden President and CEO Darren Davis said: “The second quarter of 2019 showed further weakness in our core commodities, phosphate, and aluminum, with prices continuing downward trends since 2018, although gold prices remained strong.”

“Aluminum prices remain under pressure as a result of continued uncertainty over the global trading environment, however, the transaction to restructure our MRC business is proceeding as planned and will ensure the long-term sustainability of the business,” he continued.

“Phosphate fertilizers weakened due to higher exports from China. Our MWSPC project made further good progress in the second quarter in ramping up operations and across the business, production in most of our units reached record highs. Whilst market challenges are likely to continue, production will reach record levels in 2019 and we have renewed our focus on operational excellence,” Davis continued.

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Business

Saudi GDP Grows 2.8% in First Quarter

The Saudi capital, Riyadh (SPA)
The Saudi capital, Riyadh (SPA)
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Saudi GDP Grows 2.8% in First Quarter

The Saudi capital, Riyadh (SPA)
The Saudi capital, Riyadh (SPA)

Saudi Arabia's real gross domestic product grew 2.8% in the first quarter, year-on-year, preliminary government estimates showed on Thursday.

Non-oil activities grew 2.8% in the quarter, and oil activities increased 2.3% from the prior-year period, the General Authority of Statistics data ⁠showed.

On a quarterly basis, growth shrank 1.5% in the three months to March 31 compared to the fourth quarter, driven by a decline in oil activities.

Oil activity decreased 7.2% from the fourth quarter, while non-oil activity was almost flat.

Business

IMF Warns Asia to Keep Policy in Balance Amid Energy Disruptions

FILE PHOTO: A view of the International Monetary Fund (IMF) logo at its headquarters in Washington, D.C., US, November 24, 2024. REUTERS/Benoit Tessier/File Photo
FILE PHOTO: A view of the International Monetary Fund (IMF) logo at its headquarters in Washington, D.C., US, November 24, 2024. REUTERS/Benoit Tessier/File Photo
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IMF Warns Asia to Keep Policy in Balance Amid Energy Disruptions

FILE PHOTO: A view of the International Monetary Fund (IMF) logo at its headquarters in Washington, D.C., US, November 24, 2024. REUTERS/Benoit Tessier/File Photo
FILE PHOTO: A view of the International Monetary Fund (IMF) logo at its headquarters in Washington, D.C., US, November 24, 2024. REUTERS/Benoit Tessier/File Photo

Asian countries will need to keep their powder dry in preparation for future shocks even as they tackle an energy crisis caused by the Iran War, IMF Director for Asia Pacific Krishna Srinivasan said on Thursday.

With energy supplies running short due to the logjam in the Strait of Hormuz, southeast Asian economies have budgeted significant sums to cushion the impact of surging prices, and have also introduced measures to conserve energy, including work from home plans.

But Srinivasan, speaking at a media roundtable, warned countries against ramping up energy subsidies.

"If you give generalised subsidies, it's very hard to pull it back," he said, adding that countries should instead provide budget neutral ⁠and targeted fiscal ⁠support, and maintain fiscal discipline.

"In other words, cut elsewhere to support people who are being hit by the energy shock," Reuters quoted him as saying.

Srinivasan said that while some markets, such as Thailand and China, can hold off on tightening monetary policy because they are in deflationary territory, markets already above their inflation targets, including Australia, need to start now.

He also ⁠noted that some markets, such as the Philippines, have decided to tighten preemptively to anchor inflation expectations, but he added that the IMF's advice would have been to see through the shock and wait to see if inflation really picks up in a meaningful way.

"You may want to take insurance upfront or you may want to wait and see so that you don't hurt growth ... it's a very difficult balance to strike as a central bank governor," he said.

The IMF cut its global GDP outlook for 2026 to 3.1% on April 14, assuming ⁠a short-lived Middle ⁠East conflict and oil prices normalising in the second half of the year.

However, IMF chief economist Pierre-Olivier Gourinchas warned that the fund's "adverse scenario" of 2.5% growth looked increasingly likely, with continued energy disruptions and no clear path to end the conflict.

Srinivasan said that if the Strait of Hormuz remains closed beyond the next three months and oil prices stay elevated for the rest of the year, the IMF's more severe growth scenarios will become more likely.

There are still downside risks to growth, with a number of uncertainties facing the world economy, including the duration of the energy crisis and the severity of fertiliser shortages, which could create a food supply shock, he said.

Business

Euro Zone Inflation Soars Further Above ECB Target

FILE -Clouds cover the sky over the headquarters of the European Central Bank in Frankfurt, Germany, Sept. 11, 2025. (AP Photo/Michael Probst, File)
FILE -Clouds cover the sky over the headquarters of the European Central Bank in Frankfurt, Germany, Sept. 11, 2025. (AP Photo/Michael Probst, File)
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Euro Zone Inflation Soars Further Above ECB Target

FILE -Clouds cover the sky over the headquarters of the European Central Bank in Frankfurt, Germany, Sept. 11, 2025. (AP Photo/Michael Probst, File)
FILE -Clouds cover the sky over the headquarters of the European Central Bank in Frankfurt, Germany, Sept. 11, 2025. (AP Photo/Michael Probst, File)

Euro zone inflation surged further in April on soaring energy costs, Eurostat data showed on Thursday, adding to the case for interest rate hikes, even if benign underlying price growth figures ease the urgency of any move.

Inflation in the 21 countries sharing the euro currency jumped to 3.0% this month from 2.6% in March, moving further above the European Central Bank's 2% target, with energy costs accounting for the vast majority of the increase.

A closely watched figure ⁠on underlying or 'core' ⁠inflation, which excludes volatile food and energy prices, meanwhile slowed to 2.2% from 2.3% a month earlier.

Services inflation, a stubbornly high component of the price basket over the past several years, slowed to 3.0% from 3.2% while inflation for non-energy industrial ⁠goods, a key drag on prices picked up to 0.8%.

The figures are a mixed bag for the ECB, which is meeting on Thursday and will likely keep interest rates unchanged, even if it signals that policy tightening is increasingly likely, Reuters reported.

The high headline inflation print strengthens the argument for interest rate hikes but the underlying figures suggest that the initial energy shock is not yet creating major ⁠second round effects.

The ⁠ECB is largely powerless against an energy shock but must step in if these second round effects become visible as they risk creating a hard-to-break self-sustaining inflation spiral.

This is why investors expect the ECB to hike its 2% deposit rate already in June and see at least two more moves before the end of the year.

This outlook is volatile, however, and largely depends on developments in the Iran war and oil prices, which hit a four-year-high of $124 on Thursday.