Red Sea International Company Shows Strong Financial Performance in First Half of 2025
Red Sea International Company has released its consolidated financial results for the first six months of 2025, demonstrating a net profit of SR1.87 million. This represents a remarkable 168% improvement compared to the same period in 2024. However, the company saw a 31% decline in net profit for Q2 2025, reaching SR6.39 million compared to Q2 2024.
Revenue Growth and Operating Profit
By the end of Q2 2025, the company’s revenues for the first half reached SR1,479 million, marking a significant 54% increase from H1 2024. Q2 2025 revenues stood at SR779 million, showing a 4% improvement from Q2 2024. This growth was primarily driven by enhanced performance and higher project completion rates. Operating profit for the first six months of 2025 reached SR42.8 million, up by 44% from the same period in 2024. However, operating profit for Q2 2025 dropped by 10% compared to Q2 2024, standing at SR23.72 million.
Impact of Accounting Adjustments
Despite the overall positive performance in the first half of the year, the company faced challenges due to accounting adjustments related to the Amortization of Purchase Price Allocation (PPA). These adjustments stemmed from the acquisition of First Fix Company for Electrical Works Ltd. in 2024, resulting in accounting losses of SR121.75 million in 2024 and SR48.7 million in H1 2025.
Clarification on Losses
It is important to note that these losses are purely accounting adjustments required under the International Financial Reporting Standards (IFRS) and do not reflect actual operational losses. This clarification has been included in the notes to the consolidated financial statements for the periods ending 31 March 2025 and 30 June 2025.
Capital Increase Plan
To mitigate the impact of the PPA provision, the company is moving forward with the Board of Directors’ recommendation to boost capital by converting debts owed to minority shareholders (the sellers) in First Fix into shares. The company has submitted this request to the Capital Market Authority for review, with a decision expected in the near future.
