Geopolitical tensions disrupted East Pipes raw material supplies: Exec

Mohammed Darweesh, Acting CEO of East Pipes Integrated Co. for Industry, said geopolitical tensions have impacted the company's raw material supply, as it relies primarily on imports shipped through the Strait of Hormuz and the Bab al-Mandab Strait to Dammam Port.

Speaking to Al Arabiya, Darweesh said East Pipes was forced to reroute shipments through Jeddah Islamic Port and Yanbu Commercial Port, resulting in longer shipping times and higher costs. Some vessels also faced waiting periods of up to four weeks before berthing.

He said customer contracts include clauses allowing the company to recover additional shipping costs once certain conditions are met, noting that these costs have risen by around 15% to 20%.

The company posted strong financial results for the first quarter ended June 30, 2026, driven by higher sales volumes and improved average selling prices.

It maintains a strong financial position, with no outstanding debt and cash balance of about SAR 800 million as of June 30, reflecting its financial strength and ability to withstand current market challenges.

Commenting on changes in sales volumes between fiscal periods, Darweesh said the company's business is based on producing pipes by weight rather than length, with output varying depending on pipe specifications such as diameter and wall thickness.

During the first quarter, East Pipes focused on producing smaller-diameter pipes of up to 30 inches, which was reflected on sales volumes due to the change in the production mix. Moreover, average selling price in the first quarter was relatively higher than in the previous quarter despite the different product mix.

The company currently does not export any sales, as its operations are focused on meeting strong domestic demand driven by gas and water projects.

It is evaluating suitable export channels and may allocate part of its production capacity to overseas markets while gradually increasing output.

According to Argaam data, East Pipes reported a 36% year-on-year increase in net profit to SAR 122.9 million for Q1 2026/27, compared with SAR 90.3 million in the year-earlier period.