SENAAT holds SAR 5.5B backlog, eyes stronger 2H: CEO

Ahmed Zaateri, CEO of Advanced Building Industries Co. (SENAAT)

Ahmed Zaateri, CEO of Advanced Building Industries Co. (SENAAT), said the group’s current project backlog stood at SAR 5.5 billion as of June 30, 2026, with a strong portfolio of projects and opportunities that leverage its integrated manufacturing, services and construction capabilities.

In an interview with Argaam, Zaateri said the improvement in financial results was driven mainly by strong performance in the steel and insulation materials segments, alongside better profit margins and continued efforts to improve operational efficiency, reflecting the strength of the group’s diversified industrial platform.

Steel and insulation materials led performance during the period, Zaateri said, benefiting from strong demand and favorable pricing, as well as solid performance in Saudi Arabia and export markets.

He added that the air-conditioning segment continued to grow revenue, although profitability was affected by financial adjustments related to inventory at the consumer and home products and central air-conditioning business units.

The construction segment was affected by project execution timing, Zaateri said, as well as delays linked to regional geopolitical volatility and supply-chain disruptions, noting that the project and opportunity pipeline remains strong, with a focus on large, technically complex projects across the commercial, industrial, healthcare, logistics-center and data-center sectors.

On the air-conditioning inventory shortfall and related adjustments, Zaateri said the two figures relate to different aspects of the issue. As of June 30, 2026, management recognized SAR 63.7 million in adjustments from inventory reconciliation and settlement work, while separately recognizing an actual net inventory shortfall of SAR 21 million identified through a physical stock count, bringing the total adjustment to SAR 84.7 million.

The SAR 21 million shortfall was recognized in cost of revenue for the first half of 2026, as there is no conclusive evidence that it arose in an earlier period, he said, noting that amounts disclosed at previous reporting dates represent balances at each respective date and should not be aggregated.

Zaateri said management referred the matter to the board as soon as it was identified, prompting the board to form a special committee to oversee the company’s response, independent investigation and corrective measures. The company also appointed an independent adviser to assess the inventory and validate the findings, with all adjustments supported by work completed to date reflected in the published financial statements.

The independent investigation remains ongoing to determine the causes and scope of the issue, Zaateri said, noting that the company has not identified a similar impact on other air-conditioning units or businesses in other segments. Management does not currently expect further material adjustments, he added, but will assess new information and disclose any material impact as required, while corrective measures have begun and the board continues to oversee the investigation and strengthen controls.

Regarding Gulf Insulation Group’s application to offer part of its shares on the Main Market, Zaateri said the group is completing the required regulatory procedures and will announce any material developments in due course, noting that the offering is part of its strategy to unlock the underlying value of its businesses and support future growth.

On the expected financial impact of the Zoodcon contract with TKE, Zaateri said the impact is expected to begin in the fourth quarter of 2026 as execution progresses, with the actual contribution depending on the stages of work completed.

Zaateri expects positive performance to continue in the second half of 2026, supported by continued strength in several segments and improving business activity both domestically and internationally, adding that the company will maintain its focus on operational efficiency and disciplined cost management.

The company expects strong growth to continue in steel and insulation materials, alongside a gradual recovery in its other segments, Zaateri said, noting that while regional geopolitical developments are affecting project timelines, material costs and supply chains, potentially causing quarterly fluctuations, the second-half outlook remains better than the first half.

According to Argaam data, SENAAT reported net profit of SAR 54.2 million for the first half of 2026, up from SAR 37.2 million in the same period of 2025. Second-quarter profit stood at SAR 44.4 million.