Al Khodari blames employment laws for profit drop
Saudi company sees profits slump by 68.9% in Q4
Abdullah A. M. Al-Khodari Sons Co has revealed changes to Saudi Arabia's employment laws has resulted in a 68.9% drop in profits for the fourth quarter.
In a bourse filing, Al Khodari said it made $2.3m (8.5m riyals) in Q4, compared to $7.2m (27.3m riyals) over the same period in 2012.
According to the company, the slip was down to increased manpower costs (up 28.4%) and a 63.8% rise in financing costs. The postponement of an auction of surplus equipment to the first quarter of this year also impacted the bottom line.
In late 2012, the Labour Ministry began charging companies a fee of $639 (2,400 riyals) for each foreign worker they employed above their number of Saudi staff. The policy is part of efforts to encourage companies to hire Saudi nationals, who are generally more expensive than foreigners.
The firm and other construction companies have also been pressured by other labour policies, such as a quota system for the percentages of Saudis which firms must employ.