Saudi Cable Profit Slumps 56% on Liquidity Crisis

Riyadh, Saudi Arabia — Saudi Cable Co. reported a net profit of 44.4 million SAR for the nine months ending September 30, 2026 — a 56% collapse from 101.7 million SAR in the same period last year. Revenue fell 40% year-on-year to 68.3 million SAR, driven by persistent liquidity constraints that crippled working capital and slashed customer advance payments.

The results paint a company in structural distress. Accumulated losses reached 227 million SAR, equal to 340% of share capital. Current liabilities exceed current assets by 671.4 million SAR. An auditor’s going-concern warning accompanies the report — a signal that Saudi Cable’s survival depends on events that have not yet occurred.

Quarterly Breakdown

In Q3 2026 alone, Saudi Cable generated revenue of 20 million SAR — down 49% from 39 million SAR in Q3 2025, and down 23% from 26 million SAR in Q2 2026. The sequential drop reflected a 56% decline in contract revenue, as cable deliveries received in Q2 did not repeat in Q3. Gross loss for the quarter was 6.1 million SAR. Operating loss reached 21.1 million SAR.

Net profit for Q3 2026 came in at 18.3 million SAR — up sharply from 2.5 million SAR in Q2 2026. However, that improvement came almost entirely from a 38% drop in operating expenses and a 97% reduction in other losses, not from any underlying business recovery. Revenue itself continued to shrink.

Key Drivers

• Liquidity constraints and reduced customer advance payments cut into revenue across all nine months.
• Higher raw material prices widened cost pressure even as volumes fell.
• Regional geopolitical conditions added logistics friction and inflated unabsorbed factory overhead.
• Saudi Cable’s share of profit from associate Midal contributed 139 million SAR year-to-date — but that figure fell 23% from the prior-year period.
• The net profit from operations of 44.4 million SAR is almost entirely derived from Midal’s associate contribution, not from Saudi Cable’s core cable manufacturing business.

Going Concern and Restructuring

Auditors issued an unmodified opinion but attached a going-concern emphasis. Accumulated losses of 227 million SAR represent 340% of group share capital. Current liabilities exceed current assets by 671.4 million SAR. Management’s recovery plan rests on a rights issue and future revenue growth — both classified by auditors as involving material uncertainty.

On August 26, 2026, the Fifth Circuit of the Court of Appeal in Riyadh overturned a lower court ruling and restored Saudi Cable to its Financial Restructuring Procedure. That reversal keeps the formal restructuring framework in place, but it does not resolve the underlying cash shortfall. The company also reclassified prior-period figures after identifying accounting errors related to deferred share issuance costs.

What This Means for Investors

• Saudi Cable’s operating business is generating gross losses. The headline net profit exists only because of Midal’s associate income — income that itself declined 23% year-on-year.
• The going-concern warning is not boilerplate. A 671.4 million SAR gap between current liabilities and current assets is a material threat to solvency.
• The rights issue mentioned in management’s recovery plan would dilute existing shareholders. Its outcome remains uncertain.
• Restoration of the Financial Restructuring Procedure provides legal breathing room, but it does not inject cash or restore revenue. Investors should treat any near-term profit projections with caution.

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THE SAUDI STANDARD’S VIEW: SAUDI CABLE’S CRISIS EXPOSES THE LIMITS OF ASSOCIATE DEPENDENCY

Saudi Cable’s nine-month results are a case study in the danger of mistaking associate income for operational health. With core cable manufacturing generating gross losses and a 671.4 million SAR liquidity gap widening, investors must look beyond headline profit figures to assess the true condition of this company.

• MIDAL AS A LIFELINE, NOT A BUSINESS MODEL

When a manufacturer’s net profit is almost entirely derived from its stake in an associate rather than its own production activity, the core business has effectively ceased to function as a going concern in operational terms. The 23% year-on-year decline in Midal’s contribution compounds this vulnerability, narrowing the only meaningful buffer between Saudi Cable and outright losses. Investors must weigh the risk that this external income stream continues to erode while manufacturing remains cash-negative.

• THE GOING-CONCERN WARNING DEMANDS PRECISE INTERPRETATION

An auditor’s going-concern emphasis attached to an unmodified opinion is not a procedural formality — it is a structured signal that the company’s survival depends on contingent outcomes rather than operational momentum. A current liability shortfall of 671.4 million SAR, combined with accumulated losses equivalent to 340% of share capital, places Saudi Cable in a category where conventional valuation metrics are largely irrelevant. Market participants pricing this stock on earnings multiples alone are applying the wrong analytical framework.

• RESTRUCTURING PROCEDURE RESTORES STRUCTURE, NOT SOLVENCY

The Court of Appeal’s reinstatement of the Financial Restructuring Procedure is a legally meaningful development that prevents creditor action from accelerating the company’s collapse. However, legal protection and financial recovery are distinct conditions, and the restoration of restructuring status does nothing to address the raw cash deficit or restart contract revenue flow. Investors should calibrate expectations accordingly: the restructuring framework buys time, it does not create value.

• RIGHTS ISSUE RISK IS ASYMMETRIC FOR EXISTING SHAREHOLDERS

Management’s recovery plan centers on a rights issue as a primary capital-raising mechanism — a path that mathematically dilutes existing equity holders while offering no guarantee of sufficient uptake to close the liquidity gap. In a company carrying losses equal to more than three times its share capital, new equity issuance is a distressed instrument, not a growth catalyst. Shareholders must assess not only whether the rights issue proceeds, but whether it raises enough capital to materially alter the company’s trajectory.

Saudi Arabia’s Vision 2030 infrastructure ambitions — spanning power grid expansion, industrial cities, and giga-project connectivity — represent a generational demand cycle for cable manufacturing capacity. Saudi Cable’s structural position should, in principle, align with that demand. Yet the company’s inability to convert that macroeconomic tailwind into working capital and contract execution illustrates a critical lesson for the Kingdom’s industrial transformation: sectoral opportunity does not automatically translate into corporate viability. For Vision 2030’s manufacturing pillar to deliver on its promise, companies in capital-intensive industries must demonstrate balance sheet discipline commensurate with the scale of ambition the national strategy demands.