Maaden Nine-Month Profit Falls 3% on Cost Surge

Riyadh, Saudi Arabia — Saudi Arabian Mining Company (Maaden) posted a nine-month net profit of 5.49 billion SAR through September 2026, down 3.2% from 5.68 billion SAR in the same period last year. Rising costs in the phosphate business unit drove the decline, even as revenue climbed 10.5% to 30.87 billion SAR.

The divergence between stronger revenue and weaker profit tells the real story. Higher commodity prices and gold sales volume pushed the top line up. But surging logistics costs, elevated sulfur prices, and reduced ammonia exports squeezed margins hard. Gross profit fell 12.8% to 9.30 billion SAR for the nine-month period.

Quarterly Breakdown

The third quarter alone showed sharper stress. Maaden earned 1.68 billion SAR in net profit for Q3 2026 — down 23.7% from 2.21 billion SAR in Q3 2025, and down 22.7% from 2.18 billion SAR in Q2 2026. Revenue rose 11.3% year-on-year to 11.14 billion SAR, yet operating profit collapsed 46.5% to 1.57 billion SAR. The gap between revenue growth and profit contraction widened sharply quarter by quarter.

Sequential comparison reinforces the concern. Revenue edged up just 1.8% from Q2 to Q3 2026, while gross profit dropped 17.7% and operating profit fell 33.6%. Higher exploration expenditure, elevated finance costs, and lower finance income compounded the margin squeeze.

Key Drivers

• Phosphate cost surge: Higher sulfur costs and logistics disruptions drove cost of sales sharply higher in the phosphate unit, the dominant drag on profitability.
• Ammonia exports absent: No ammonia export sales in Q3 2026 removed a material revenue and profit contributor present in prior periods.
• Gold offsets losses: Higher gold sales volumes and stronger commodity prices partially cushioned the blow across the nine-month period.
• Exploration spending rises: Maaden increased exploration expenditure in Q3, lifting operating costs in support of long-term resource development.
• One-off insurance gain: The phosphate unit recognized 375 million SAR in insurance proceeds during the nine-month period, partly offsetting cost pressure.
• Equity investments improve: Higher profit contributions from Aluminium Bahrain B.S.C. and Maaden Barrick Copper Company supported the nine-month bottom line, partially offset by an impairment at Manara Minerals on its Vale investment.

What This Means for Investors

• Margin compression is real and worsening. Gross margin fell from 38.2% in the first nine months of 2025 to 30.1% in 2026 — a significant deterioration that revenue growth alone cannot mask.
• Phosphate remains the weak link. Until sulfur costs stabilize and ammonia exports resume, the phosphate unit will continue to drag on group profitability.
• Gold is carrying more weight. Investors should watch gold volume and price trends closely — they are now a primary buffer against broader cost headwinds.
• Shareholders’ equity grew 11.9% to 66.91 billion SAR year-on-year, suggesting the balance sheet remains solid even as earnings compress. Earnings per share fell to 1.42 SAR from 1.48 SAR.

Saudi Arabia capital markets news and analysis

Latest investor news from the Saudi stock market

THE SAUDI STANDARD’S VIEW: MAADEN’S MARGIN CRISIS DEMANDS STRUCTURAL ANSWERS

Maaden’s nine-month results present a paradox that investors cannot afford to ignore: a company growing its top line at double digits while watching its profit base erode quarter by quarter. The widening gap between revenue expansion and margin contraction signals that cost discipline, not commodity tailwinds, will define Maaden’s investment case in the near term.

• PHOSPHATE IS THE PRESSURE POINT

The phosphate business unit has become the single most consequential variable in Maaden’s profitability equation. Elevated sulfur input costs and logistics disruptions are structural challenges that do not resolve quickly, and the absence of ammonia export revenue compounds the damage to what should be a high-margin segment. Until these operational headwinds are addressed, phosphate will remain a drag on the group’s earnings quality.

• GOLD IS A BUFFER, NOT A STRATEGY

Gold’s role in partially offsetting phosphate weakness reflects a fortuitous commodity cycle rather than deliberate portfolio construction. Investors who extrapolate gold’s current contribution into future earnings assumptions take on meaningful pricing and volume risk. The reliance on gold to compensate for underperformance elsewhere underscores the urgency of restoring phosphate operational integrity.

• BALANCE SHEET STRENGTH BUYS TIME

Shareholders’ equity approaching 67 billion SAR provides Maaden with the financial resilience to absorb a prolonged margin recovery period without existential balance sheet risk. Rising exploration expenditure and continued investment in equity affiliates reflect a management team spending through the cycle rather than retreating from it. That discipline is strategically sound, though it creates near-term earnings per share headwinds that income-focused investors must price accordingly.

• OPERATING LEVERAGE IS CUTTING BOTH WAYS

A 46.5% collapse in quarterly operating profit against 11.3% revenue growth reveals how severely fixed and semi-fixed costs are amplifying margin pressure in the current environment. Finance costs and exploration spending layered on top of elevated input costs have created a compounding effect that revenue growth alone cannot neutralize. Investors should demand clarity on the trajectory of these cost lines before assigning forward multiples.

Maaden remains a cornerstone asset in Saudi Arabia’s Vision 2030 industrial diversification framework, with its mining expansion ambitions directly aligned with the Kingdom’s goal of building a globally competitive non-oil export sector. The current margin compression is a cyclical and operational challenge, not a structural indictment of that strategy. However, the pace at which management restores phosphate efficiency and diversifies the earnings base beyond gold will ultimately determine whether Maaden fulfills its role as a pillar of the Kingdom’s economic transformation — or becomes a cautionary lesson in the difficulty of scaling industrial complexity at national pace.