Red Sea International Company Reports a 119% Increase in Operating Profits for the First Nine Months of 2025

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Red Sea International Company announced its consolidated financial results for the first nine months of 2025, reporting a net profit of SAR 7.73 million, marking an improvement of 139% compared to the same period in 2024.

The company’s net profit for Q3 2025 reached SAR 5.85 million, reflecting a 135% decrease compared to Q3 2024.

By the end of Q3 2025, revenues for the first nine months amounted to SAR 2,466 million, an improvement of 16% compared to the same period in 2024.

Q3 2025 revenues totaled SAR 986 million, showing a 40% increase compared to Q3 2024.

This growth is mainly attributed to improved performance and higher completion rates for ongoing projects.

Operating profits for the first nine months of 2025 amounted to SAR 67.8 million, representing a 119% improvement compared to the same period in 2024.

Operating profits for Q3 2025 reached SAR 25 million, a remarkable increase of 1,810% compared to Q3 2024.

The company’s performance improvement in the first nine months of the year came despite lower profitability due to accounting adjustments related to the Amortization of Purchase Price Allocation (PPA).

In 2024, Red Sea International completed the purchase price allocation process for the acquisition of First Fix Company for Electrical Works Ltd., resulting in an accounting loss of SAR 121.75 million in 2024 and SAR 73.1 million during the first nine months of 2025.

These losses are purely accounting treatments related to the acquisition process, as stipulated and recognized under International Financial Reporting Standards (IFRS), and do not represent actual operational losses. This has been clarified in the notes to the consolidated financial statements for the periods ending March 31, June 30, and September 30, 2025.

To address the impact of the purchase price allocation and accumulated losses, the company is currently undergoing a financial restructuring, along with efforts to enhance operational efficiency to better absorb fixed costs and further support growth and profitability.

Following the Board of Directors’ recommendation to increase the company’s capital by converting the debts owed to the minority shareholders (sellers) of First Fix (pertaining to the deferred portion of the acquisition price) into shares, the Capital Market Authority (CMA) approved the company’s request on October 1, 2025, to increase capital by converting related-party debts.

The company is now seeking shareholder approval at the Extraordinary General Assembly Meeting on November 12, 2025, for all items related to the capital increase.

Once approved, the company will issue 18.03 million ordinary shares, raising its capital from SAR 302.34 million to SAR 482.67 million, which will directly reduce accumulated losses from 98.3% to 61.6% of the company’s capital (based on the accumulated losses reported in the Q3 2025 financial statements).

Following the issuance of all shares related to the debt conversion, the Board of Directors intends to recommend utilizing the entire share premium resulting from this transaction, amounting to SAR 295.69 million, to offset the remaining accumulated losses, bringing them down to nearly 0% of the company’s capital of SAR 482.67 million.

Approval of all items related to the capital increase by the Extraordinary General Assembly is considered a key component of the company’s restructuring plan, supporting improved profitability, operational efficiency, and profit margins — as demonstrated in Q3 2025 results — and paving the way for future expansion and new business ventures.

The company urged shareholders to carefully review the shareholder circular before making any voting decisions on the Extraordinary General Assembly items, emphasizing that this announcement does not constitute a recommendation or invitation to vote in a specific manner or to make any investment decisions.

In case of any inquiries or uncertainties regarding the contents of the circular or the risks associated with the proposed transaction, shareholders are advised to consult a licensed financial advisor.