Saudi construction firm Abdullah A. M. Al-Khodari Sons Co. announced its Q3 net profit dropped 44 percent to SR12.18 million ($3.24 million), citing higher costs as a government levy on foreign workers continued to hit its bottom line, according to Tadawul website.

The company also had posted a 43 percent slump in its Q2 net profit.

The higher costs listed by the company include the government fee of SR2,400 for each foreign worker in excess of the Saudi nationals in a company. This government move is aimed at promoting employment among citizens. Other expenses and funding costs also weighed on profit, Al-Khodari said.

The company added in its Tadawul statement that delays in issuance of visas for foreign workers on its projects pushed up labor costs.

The impact on profits from Saudi labor reforms and policies would be felt well into next year, Al-Khodari’s chief executive had said in his statement earlier in September.

However the company, which has about 17,000 employees, won SR611.4 million worth of projects in Q3, an increase of 62.5 percent; new projects for the first nine months of 2013 rose to SR2.61 billion.

The company’s nine-month net profit dropped 48 percent from a year earlier to SR55.85 million, the company added.

The statement added: “Start-up of some manpower intensive projects just weeks after award, the slow issuance of visas, and the pending balance of more than 1,500 visas (difference between number of visas demanded based on government client support letters and those granted based on the Ministry of Labor’s applied formula) related to current projects started prior 2013, has kept the need to hire temporary manpower at exorbitant rates, and further increased the manpower rental by SR3.8 million.”

Indirect manpower costs rose by SR3.2 million due to cost of hiring in line with the growth Strategy and inflationary pressure, the company said highlighting reasons for declining profits.