Al Arabia’s Q2 2025 losses attributed to new project costs: Chairman

Mohammed Alkhereiji, Chairman of Arabian Contracting Co. (Al Arabia)

Mohammed Alkhereiji, Chairman of Arabian Contracting Co. (Al Arabia), attributed the Q2 2025 losses to the incremental costs of new projects that had not yet entered the operational phase.

This is in addition to the impact of the application of accounting standards on long-term contracts, which resulted in higher expenses for the current period before the expected revenues began to be realized, he added in an interview with Al Arabiya Business.

According to the top executive, all of the company's major contracts, which span 10 years, were secured in close succession, thus doubling the impact of incremental costs on the current financial results.

He pointed out that these projects, most notably the Remat Al-Riyadh project, have not yet reached the full run rate, be it in the digital zones or the new high-end billboards, which are expected to generate high revenues upon their launch.

The completion of these projects and the planned exclusivity are poised to be achieved in Q4 2025. This should follow improved market conditions, along with the company's confidence in the strength of the Saudi economy.

That should in turn be reflected in a striking uptick in Al Arabia’s financial results and return to profitability, he underlined.

Alkhereiji also indicated that Al Arabia is currently in advanced discussions with Remat Al-Riyadh Development Co. to activate a previously announced agreement, which stipulates converting a portion of their joint project's revenues into additional shareholding in the former.

According to Argaam’s data, in March 2024, Al Arabia had signed an independent agreement with Remat Al-Riyadh to transfer part of the investment returns owed to the latter, under the construction, operation, and maintenance contract for Riyadh's outdoor billboards, into Remat Al-Riyadh's stake in Al Arabia.

The agreement involves an annual deduction of SAR 200 million or 10% of the project's yearly income, whichever is greater. This is in order to allocate shares in Al Arabia to Remat Al-Riyadh on an annual basis for the entire duration of the project.

The chairman noted that the company is considering making amendments and allocating compensations to some existing contracts if it fails to secure certain rights, which could have a positive impact on its financial performance going forward.

Alkhereiji also stated that Al Arabia saw year-on-year (YoY) sales growth during the first half of 2025, despite the challenges facing local and global markets and the overall decline in advertising spending.

This uptrend was attributed to the company's increased market share of advertising, including attracting ads that had been previously directed to social media platforms. This came without the need to increase the number of billboards, according to the top executive.

He also stressed that the completion of new projects and the growing number of quality billboards are factors likely to help attain target revenues while also bolstering the company’s return to profitability.

Alkhereiji expects a clearer outlook between the third and fourth quarters of this year.

Based on data available with Argaam, Al Arabia reported a net loss of SAR 108.5 million in H1 2025, against a net profit of SAR 148.1 million a year earlier. The second-quarter loss amounted to SAR 156.7 million.