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

Argaam

a day ago

Mohammed Alkhereiji, Chairman of Arabian Contracting Co. (Al Arabia), said that the company's losses in the second quarter of 2025 are due the 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 high expenses for the current period before the expected revenues began to be realized, he added.
In an interview with Al Arabiya Business, the chairman indicated that all of the company's major contracts, which span ten years, began within a short period of time, doubling the impact of costs on the current financial results.
He pointed out that these projects, most notably the Remat project, have not yet reached full operation, whether 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 expected to be achieved in Q4 2025, along with improved market conditions and the company's confidence in the strength of the Saudi economy, which will significantly improving the company's financial results and returning to profitability.
Al-Khereiji also indicated that the company is currently in advanced discussions with Remat Al-Riyadh to activate a previously announced agreement, which stipulates converting a portion of the project's revenues with Al Arabia into shares in the latter.
According to Argaam's data, Al Arabia signed, in March 2024, an independent agreement with Remat Al-Riyadh Development Co. to convert part of the investment returns owed to Remat Al-Riyadh 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 (10%) of the project's annual 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 compensations to some existing contracts if it fails to secure certain rights, which could have a positive impact on its financial performance in the coming periods.
Al-Khereiji also stated that Al Arabia saw sales growth year-on-year during the first half of 2025, despite the challenges facing local and global markets and the overall decline in advertising spending.
This growth is attributed to the company's increased market share of advertising, including attracting advertisements previously directed to social media platforms, without the need to increase the number of billboards, according to the top official.
He also stressed that the completion of new projects and the increase in quality billboards will support the achievement of the targeted revenues and the return to profitability, expecting the picture to become clearer between the third and fourth quarters of this year.