East Pipes CEO: Q3 2026 outlook positive; product demand still strong

He said the company is focusing on meeting delivery schedules, improving production efficiency, strengthening cost management, and optimizing its product-project mix to support sustainable performance.

However, the quarterly performance may fluctuate, depending on project delivery schedules, product mix, raw material prices, and logistical factors.

Darweesh said the recent geopolitical developments have forced some vessels to reroute to Jeddah and Yanbu ports, driving up freight, logistics, and war-risk insurance costs.

He expects the new contract with Saudi Aramco, worth more than SAR 771 million, to serve as a key revenue driver in Q4 2026/27 and Q1 2027/28.

That contract is expected to generate more than SAR 670 million in revenue, excluding VAT. The quarterly revenue recognition will depend on the pace of manufacturing and delivery timelines, besides client approvals. Accordingly, the impact may vary from one quarter to another.

The contract will provide clear support for revenue and utilization rates throughout its execution period, Darweesh said, noting that its significance goes beyond its financial value. It also reflects customers’ confidence in the quality of the company’s products and its ability to execute major projects in line with specified technical requirements and delivery schedules.

Darweesh added that the Aramco contract coincides with the commercial operation of East Pipes’ recent capacity expansions, strengthening its footprint in the oil and gas sector and providing clearer revenue visibility. On profit margins, he emphasized that margins vary by project specification, pipe diameter, raw material costs, and logistics, making direct comparisons to average historical margins imprecise.

East Pipes is currently focused on executing the project to the highest standards of quality, safety, and efficiency while maintaining its strong track record of meeting customer commitments, he added.

On the contract backlog, Darweesh said East Pipes announced three contracts with Saudi Aramco in September alone, worth a combined SAR 837 million (VAT inclusive).

He clarified that historically announced contract totals reflect initial values upon signing rather than remaining backlog, as balances continually decrease as revenue is recognized upon delivery.

The recently-awarded contracts have underpinned the company’s backlog and improved visibility into production and revenue, alongside ongoing oil and gas and water projects.

Darweesh assured demand for the company’s products remains strong, with significant momentum across projects and available opportunities.

He estimates major energy-sector expansion plans, including oil and gas transmission projects and network development, to support demand in the coming years, alongside several major water projects.

Demand in the energy and water sectors is structural and long term, driven by energy and water security, industrial expansion, and urban development, rather than short-term cycles, the acting CEO explained.

To capitalize on market demand, East Pipes proactively expanded its nominal production capacity from 400,000 tons to nearly 500,000 tons annually, with actual effective capacity reaching up to 600,000 tons per year depending on project specifications.

East Pipes maintains a positive market outlook, with recent capacity expansions strengthening its readiness to meet and capitalize on demand levels. However, project tendering and award timing remain subject to client schedules and execution plans.

The company aims to sustain and strengthen its operating and financial momentum, with continued focus on operational efficiency and disciplined cost management, he concluded.