Saudi's Al-Khodari announces $8.7mn Q1 net profit
Operating profit falls by 96%, manpower costs increase by 31%
Saudi Arabian construction firm Abdullah A M Al-Khodari Sons has recorded a net profit of $8.7mn (SAR 32.63mn) for the first quarter of 2014 – a rise of 78% from the same period last year.
The company said the figure was achieved on the back of earnings from an auction of plant and machinery which brought in $11mn (SAR 41.3mn).
However, the operating profit plunged 96% to $272,000 (SAR 1.02mn), partly because of reforms to Saudi Arabia's labour market which have made it more expensive to hire foreign workers. Work permit costs to the company increased by $3.5mn (SAR 13.2mn).
Profit was also hurt by an increase in depreciation costs as the company deployed equipment for newly awarded projects worth $399.7mn (SAR 1.5bn), a 31% rise in manpower costs mainly due to a ramp-up of labour-intensive cleaning projects, and a 69% leap in financing charges as the company enlarged its funding base to meet its contract backlog.
Chief executive Fawwaz Al-Khodari said in an interview earlier this month that he expected the labour reforms to keep weighing on the company's bottom line for a few more years, but the situation would start improving in the second half of 2014.