Al Yamamah Steel Industries Company (Al Yamamah Steel) announced its annual financial results for the period ending September 30, 2025, showing a 15.7% decrease in net profit to SAR 59.69 million, compared to SAR 70.8 million achieved during the same period of the previous year. This announcement was made in an official statement published by the company today, Sunday, on the Saudi Stock Exchange (Tadawul) website.
Reasons for the decline in financial performance
In its statement, the company attributed the decline in net profit primarily to price pressures faced by its products. Specifically, selling prices in the construction sector fell by 8.04%, directly impacting profit margins. Additionally, the company experienced a 3.99% decrease in total sales, mainly due to a sharp decline in the renewable energy sector, where sales volume fell by 33.64% and sales value by 47.54%.
Strategic recommendation not to distribute dividends
In a move aimed at strengthening the company's financial position, the board of directors of Al Yamamah Steel recommended to the general assembly, at its meeting held today, not to distribute cash dividends to shareholders for the fiscal year ending September 30, 2025. The company explained that this decision is part of a strategy to support the company's financial standing and provide the necessary liquidity to contribute to financing its future expansion projects, in addition to increasing the capital of its subsidiary, Al Yamamah Steel Rebar Company. This recommendation will be put to a vote at the ordinary general assembly meeting, the date of which will be announced later.
Context of the iron and construction sector in the Kingdom
This announcement comes at a time when the construction sector in Saudi Arabia is experiencing significant growth driven by the ambitious Vision 2030 projects. However, building materials and steel companies often face cyclical challenges related to fluctuations in global raw material prices and local price competition. The steel sector is a vital one, heavily reliant on demand for infrastructure and housing projects, and any price volatility is immediately reflected in the financial statements of companies operating in this field.
The economic importance of the decision to withhold profits
From an economic and financial perspective, the board's decision not to distribute dividends is both a precautionary and investment-oriented move. Instead of distributing cash, the company aims to reinvest these funds in its assets and subsidiaries. The focus on increasing the capital of Al Yamamah Steel Company indicates the parent company's desire to strengthen its market share in the steel reinforcement sector, a fundamental component in all current construction projects in the Kingdom. This approach may put short-term pressure on the stock due to the absence of dividends, but it aims to create long-term value for shareholders through asset growth and operational expansion.
