Maharah sees better margins ahead, holds 15% market share: CEO

Abdulaziz Al-Kathiri CEO of Maharah Human Resources Co

Maharah Human Resources Co.’s profit margins in key segments were weighed down in the first quarter of 2025, CEO Abdulaziz Al-Kathiri told Argaam in an interview. 

The impact was due to intensified competition in the human resources market—particularly in individual services—along with the impact of the company’s expansion strategy in the business sector, which aims to boost market share and retain strategic clients.  These factors altogether hurt pricing levels and profit margins.
 

Al-Kathiri explained that the decline in margins within the individual services segment during the first quarter was exceptional and was primarily ascribed to non-recurring seasonal costs. He emphasized that this impact is not expected to persist throughout 2025.
 

Maharah has a promising growth strategy focused on reinforcing its leadership position and maintaining its market share, with expectations for improved profit margins in the upcoming periods—particularly in the individual segment (hourly service), which is witnessing significant growth that is expected to positively reflect on the company’s profitability.
 

Regarding the company’s subsidiaries, Al-Kathiri stated that Maharah is currently working on evaluating suitable solutions to enhance their performance. He pointed out that the largest negative impact came from Nabd Logistics Services Co., which recorded losses in the first quarter. Following a comprehensive review, the recommendation was made to proceed with its liquidation.
 

Additionally, efforts are underway to minimize potential losses in other subsidiaries with the goal of reaching a breakeven point, which would support the improvement of gross margin in the remaining periods of 2025.
 

On market share, Al-Kathiri affirmed that Maharah continues to lead the human resources sector in terms of revenue and net profit, estimating the company’s market share in the individual and business segments at between 13% and 15%. He noted that this is currently among the highest in the market, though subject to change depending on overall market growth.
Below is the full interview: 

Q: Maharah’s net profit dropped by 53% in Q1 2025 despite a 37% increase in revenue. Could you explain this deviation between revenue growth and net profit decline?
A: The company managed to show exceptional performance and record strong revenues that leapt 37% year-on-year (YoY) in Q1 2025, driven by the company’s “Nomu” strategy, which focuses on its core operating activities in the business and individual services segments. These segments saw revenue increases of 46% and 17% respectively, due to continued rising demand for the company’s human resources services, positively impacting its operational performance.
 

The company also recorded a 7% increase in workforce numbers compared to the end of 2024, and a 24% rise compared to Q1 2024, reflecting the efficiency of the company’s operations.
 

We would like to emphasize the strength of the company’s core operations, which achieved a net profit of SAR 38 million in Q1 2025, compared to SAR 34 million in Q1 2024—an increase of 12%. However, the company faced some pressure on gross profit margins from its core operations during Q1 2025. This was due to the company’s strategic direction to support significant growth in the business services, as well as retain strategic clients and meet their rising demand, with the strategic clients’ contract renewal rate reaching 90%.
 

As for the individual services segment, gross profit margins were impacted by several factors, despite an 85% leap in hourly service revenues during this period. Intense competition in the individual services sector placed pressure on pricing and required higher operating levels, particularly during Ramadan, which is a high-demand season. Additionally, seasonal costs affected this segment, especially due to higher absence among domestic workers prior to Ramadan.
 

Gross profit was also impacted by the performance of subsidiaries, particularly the logistics segment through Nabd Logistics, which reported losses of SAR 5.2 million in Q1 2025 compared to SAR 2.9 million in Q1 2024. Nabd faced operational challenges that led to a decline in operations and a noticeable drop in revenues compared to previous periods. A decision was made to liquidate the company to halt losses and reduce its negative impact on Maharah’s financial performance.
 

The main factor behind the significant decline in net profit compared to the same quarter last year was the absence of financial results from the Saudi Health Systems Co. during this quarter, unlike Q1 2024 when it posted a SAR 19 million profit. Additionally, Maharah’s share of results from associates declined by SAR 29 million, mainly due to a sharp drop in the performance of Care Shield Holding Co. compared to the same period last year.

The group recorded a significant improvement in Q1 2025 net profit, reaching SAR 23.7 million compared to SAR 1.98 million in Q4 2024. This was due to increased revenue during the period, improved operational performance, and better utilization in the individual services segment driven by new initiatives and services. The improved results of associate Care Shield in this quarter—compared to its losses in Q4 2024—also supported this positive performance.  
 
Q: Gross income remained steady at SAR 65 million despite revenue growth. Do you see the pressure on profit margins temporary?
A: The company’s core segments faced margin pressures, mainly due to intense competition in the HR sector, especially in individual services. Additionally, the company’s strong expansion strategy in business services aimed at growing market share and retaining strategic clients impacted pricing and profit margins.
 

Margins in the individual services segment were unusually affected in Q1 by one-off seasonal costs, which are not expected to persist throughout the rest of the year. The company has a promising growth strategy focused on reinforcing leadership and maintaining market share. Profit margins are expected to improve in the coming periods—especially in hourly individual services, which have shown remarkable growth and will positively impact profitability.
 

Regarding subsidiaries, the company is working on analyzing and applying solutions to enhance their performance. The most notable impact came from the logistics sector through Nabd Logistics Co., which reported losses in Q1 2025. After a comprehensive review, liquidation was recommended. The company is also working to reduce potential losses in other subsidiaries to reach break-even, which will contribute to improving gross margins in the remainder of 2025.
 

Q: What is the company’s market share in the business and individual services segments?
A: Based on available reports and figures, Maharah continues to lead the sector in both revenue and net profit. Its estimated market share in the individual and business services segments ranges between 13% and 15%, currently one of the highest in the industry, though this may shift as the market grows. Maharah remains the largest HR-specialized company, with a strong and diverse client base that reinforces its leadership position.
 

Q: How do you assess demand for workforce services in Q1 2025? Were there specific sectors that saw more growth than others?
Demand continues to rise across all services—both business and individual services. This growth is attributed to the company’s diverse client base across sectors, coupled with the Kingdom’s strong economic momentum and major national projects. These factors helped drive growth in sectors such as construction, operations, healthcare, entertainment, and the Saudization support program (Esnad Maharah). They also accelerated growth in both the government and petrochemical sectors.
 

During Q1 2025, the company signed contracts for over 5,500 workers, with expected revenues exceeding SAR 320 million, which will significantly affect 2025 and 2026 performance.
 

Q: What was the company’s total workforce by the end of Q1 2025? Which nationalities accounted for the largest recruitment share?
A: Maharah had around 53,000 workers by the end of Q1 2025, up 7% from the end of 2024. The company expects continued growth this year between 12% and 15%, driven by the strong performance of business services, which continues to deliver excellent results in a promising market.
 

The company prides itself on the diversity of its workforce to meet various sector needs. At the end of 2024 and the beginning of 2025, Maharah ramped up recruitment from Indonesia and the Philippines to meet growing demand in the individual services segment, which is showing strong and promising performance expected to positively impact the company’s profitability going forward.
 

Q. What is your plan to address the losses recorded in certain segments, such as logistics?

A: As part of its 2025 strategy, Maharah focuses on improving the performance and results of its subsidiaries. Since acquiring or establishing some of these companies, Maharah has implemented development plans to cut losses and maximize the value added of these investments, in a way that enhances the integration of products and services supporting the company’s core activities.
 

Maharah conducted a comprehensive study of the performance of its subsidiaries and affiliates, analyzing their financial results in light of current performance and future plans. This evaluation serves as a foundation for making strategic decisions regarding whether to continue or liquidate these businesses, if necessary.
 

Recently, Maharah announced on Tadawul the liquidation of Nabd Logistics Services Co. after studying the feasibility of its continuation. This decision is considered a bold and positive step given the current results of the logistics sector. While the decision is not expected to have a material impact on Maharah, it will help alleviate the negative impact on the company’s profitability resulting from Nabd’s losses, which amounted to SAR 5.2 million in Q1 2025 and SAR 16 million in 2024.
 

Q. How do you see demand for human resources and facilities management services in the second half of 2025?

A: With the major government projects and the global events the Kingdom is preparing to host in the coming years—along with the pipeline of projects—demand in the human resources sector is expected to grow significantly, surpassing previous periods. Internally, intensive efforts are being made to expand market share. 
 

As for the facilities management sector, there has been an improvement in financial performance through reduced losses and lower general and administrative expenses. This improvement is attributed to the restructuring of contracts and current projects. The company also recently received a top-tier rating from a classification agency, which aims to enhance its opportunities to secure large-scale projects. Additionally, the company is entering new areas within the healthcare sector, such as medical equipment maintenance, as well as projects related to the petrochemical industry. The company is expecting to see growth starting from Q4 2025 and continuing into 2026.