Modern Mills Profit Climbs 11% to 62.3M SAR

Riyadh, Saudi Arabia — Modern Mills Company posted a net profit of 62.3 million SAR for the third quarter ending September 30, 2026, up 11.0% from 56.1 million SAR in the same quarter last year. Revenue surged 25.8% to 328.5 million SAR, driven by higher volumes and improved selling prices. Higher commodity costs and rising distribution expenses limited the profit gain.

For the nine-month period, Modern Mills earned 181.6 million SAR in net profit, a 5.9% increase from 171.4 million SAR a year earlier. Revenue for the period reached 906.7 million SAR, up 17.2%. Earnings per share came in at 2.24 SAR, compared to 2.12 SAR in the prior-year period.

Quarterly Breakdown

The third quarter was Modern Mills’ strongest of the year so far. Net profit rose 16.6% from the 53.4 million SAR earned in the second quarter. Revenue also beat the prior quarter by 10.6%, adding 31.5 million SAR sequentially. Gross profit climbed to 116.4 million SAR, up 13.1% from the second quarter’s 102.9 million SAR. Operating profit followed suit, rising 13.4% quarter-on-quarter to 72.2 million SAR.

Total shareholders’ equity reached 342.6 million SAR by period-end, a 26.0% jump from 272.0 million SAR a year ago. That expansion signals the company is retaining earnings effectively, even as costs rise.

Key Drivers

• Higher sales volumes across all major product categories boosted both quarterly and nine-month revenue
• Improved average selling prices supported top-line growth in the quarter and the full period
• Commodity cost inflation was not fully passed on to customers, compressing margins
• Selling and distribution expenses increased as Modern Mills expanded its geographic reach
• Higher financing costs weighed on net profit in both the quarter and the nine-month period
• Gross margin for the nine-month period reached 36.2%, down slightly from the prior year’s 37.8%

What This Means for Investors

• Revenue growth is outpacing profit growth — commodity costs and distribution spending are the gap; investors should watch whether price increases catch up with input costs
• The 26% rise in shareholders’ equity suggests a strengthening balance sheet, which provides a buffer if cost pressures persist
• Geographic expansion is a double-edged sword — it is lifting volumes but also pushing up operating expenses, so execution discipline matters
• At 2.24 SAR earnings per share for nine months, full-year profitability trajectory looks stable, though margin recovery depends on commodity price trends in the final quarter

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THE SAUDI STANDARD’S VIEW: MODERN MILLS SHOWS REVENUE MUSCLE, BUT MARGIN DISCIPLINE IS THE REAL TEST

Modern Mills has delivered a headline-worthy quarter, with double-digit profit growth and accelerating revenue momentum. Yet the more important story for investors lies beneath the surface: the widening gap between top-line expansion and bottom-line conversion, and what it signals about the company’s cost management trajectory heading into the final quarter of 2026.

• REVENUE QUALITY DESERVES SCRUTINY

A 25.8% quarterly revenue surge is an impressive figure, but when net profit grows at less than half that rate, the quality of that revenue warrants examination. The combination of commodity cost inflation and distribution expense growth is absorbing a meaningful share of each additional riyal earned. Investors should treat top-line momentum as a necessary but insufficient signal of operational health.

• BALANCE SHEET STRENGTH PROVIDES STRATEGIC RUNWAY

The 26% year-on-year expansion in shareholders’ equity to 342.6 million SAR is among the more reassuring data points in this report. A strengthening equity base gives Modern Mills the financial flexibility to absorb cost pressures without resorting to leverage-heavy solutions. This positions the company as a relatively resilient holding in a sector exposed to global commodity cycles.

• GEOGRAPHIC EXPANSION IS A CALCULATED BET

Rising distribution costs are not simply an efficiency problem — they reflect a deliberate strategic push to deepen market reach. The risk is that volume gains from new geographies take longer to mature into margin-accretive contributions than the market expects. Investors should monitor whether incremental revenue from expansion delivers improving returns over the coming two to three quarters, or whether costs continue to lead gains.

• MARGIN COMPRESSION SIGNALS A SECTOR-WIDE PRESSURE POINT

The nine-month gross margin retreating from 37.8% to 36.2% reflects a structural challenge facing food manufacturers operating in commodity-intensive supply chains. The inability to fully pass input cost increases onto customers points to competitive pricing dynamics within the sector. Margin recovery in the fourth quarter will depend heavily on global wheat and input commodity trends, factors that remain outside management’s direct control.

Modern Mills’ performance is consistent with the broader ambition embedded in Vision 2030 to build resilient, domestically anchored food security infrastructure. As Saudi Arabia continues to reduce its dependence on imported food products and develop industrial-scale local production, companies like Modern Mills occupy a strategically significant position in the national economic architecture. Sustained profitability, geographic expansion, and balance sheet discipline are precisely the qualities that align with long-term capital deployment in the Kingdom’s evolving consumer and industrial landscape.