Riyadh, Saudi Arabia — Saudi Paper Manufacturing Company posted a net profit of SAR 34.58 million for H1 2025, down 44.4% from SAR 62.25 million a year earlier. Despite modest revenue growth, the drop in Saudi Paper H1 2025 profit was driven by foreign exchange losses, higher impairment provisions, and rising administrative expenses.

Revenue rose 1.3% to SAR 437.01 million, supported by stronger sales of paper rolls and converting products. Market share expansion and improved customer reach helped lift the top line. Shareholders’ equity increased 5.8% to SAR 547.83 million, while EPS fell to SAR 0.94 from SAR 1.68.

Q2 Saudi Paper Manufacturing Earnings Hit by FX Losses and Lower Volumes

In Q2 2025, net profit fell to SAR 13.9 million, down 46.5% year-on-year and 32.8% from Q1. Quarterly revenue slipped 8.7% to SAR 208.53 million, with volumes reduced during the Eid holiday.

The profit drop reflected SAR 6.05 million in FX losses, a SAR 2.8 million increase in receivables impairment, and lower other income. These factors outweighed a margin boost, with gross profit reaching 34% in Q2 versus 30% in Q1.

Margins Face Raw Material Cost Pressures

Year-to-date, fluctuating raw material prices squeezed profitability, even as sales volumes grew. Additional FX losses of SAR 8.8 million and reduced other revenues also weighed on results.

 

 

THE SAUDI STANDARD’S VIEW: Currency and Cost Headwinds Offset Market Gains

Saudi Paper’s H1 2025 performance shows the dual challenge of sustaining growth while protecting margins.

  • Top-line strength, bottom-line strain: Solid sales in paper rolls and converting products highlight market resilience, yet cost and currency headwinds continue to erode profits.
  • FX volatility is a key risk: Losses of SAR 8.8 million in H1 underline the need for stronger currency hedging strategies.
  • Operational efficiency gains: The 4-point margin increase in Q2 reflects improved production efficiency, though external costs diluted the impact.
  • Balance sheet stability: Nearly 6% equity growth shows financial resilience and supports ongoing capacity investments.

Saudi Paper now needs to convert revenue gains into earnings stability. Tighter cost control, better FX risk management, and strategic sourcing could help capture the full benefit of Saudi Arabia’s growing paper demand, aligning with Vision 2030’s manufacturing diversification goals.

 

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