Labour, production costs send Jordan Phosphate Mines Co. into tailspin

AMMAN — Despite higher earnings from sales, data published by Jordan Phosphate Mines Company (JPMC) showed a JD6.7 million loss during the first six months of this year.

Midyear financial results revealed that JPMC’s sales reached JD328 million, a 13.8 per cent increase over the JD288 million recorded during the January-June period of 2013.

According to the company, sales of crude phosphate went up by 21 per cent and fertiliser exports surged by 61 per cent. But the rise was  shattered by low prices on the international market. 

Data showed that JPMC enjoyed a rise in cash flow from operational activities as the amount reached JD26.3 million during the first half of 2014, compared to JD3 million during the same period of 2013.

Operational profit shot up by 41 per cent, reaching JD10.6 million, compared to JD7.5 million, and the company's assets also rose by 4.4 per cent to JD1.16 billion at the end of June compared to JD1.11 at the end of last year.

Although  profit before tax and provisions amounted to JD8 million at the end of June 2014, down from JD10.3 million at the end of June 2013, the company ended the first half of this year in the red.  

JPMC noted that JD13 million allocated as “incentives for employees” besides taxes, the gross profit turns into a JD6.7 million loss.    

JMPC's Chairman Amer Majali attributed the lower profitability, despite the increase in output and sales during the first six months of the year, to the decline in prices on the international market and higher expenditure  linked to the rise in labour agreements' costs. 

He listed work-stoppages and strikes as well as the increase in costs of production inputs such as raw materials, electricity and water prices and mining fees as other negative factors  

However, Majali underlined that all indicators, including the production and sales, continue to improve as planned. 

He noted that the company is currently embarking on plans to reduce production costs, while increasing operational efficiency to generate more profit during the second half of the year. 

According to JPMC Chief Executive officer Shafiq Ashqar, strikes held for almost three weeks in the second quarter of the year have negatively affected the company's financial situation for the first half of 2014.

Experts estimated the losses as a result of the strike at around $45 million, said Ashqar, who noted that this amount would have increased the company's profits by no less than $12 million.