The annual financial results of Care International, listed on the Saudi Stock Exchange, revealed a sharp decline in net profits during the fiscal year ending December 31, 2024. Profits fell by a significant 98.8% to settle at only SAR 459,300, compared to profits of SAR 37.9 million achieved in the previous fiscal year, reflecting a fundamental shift in the company's final results for this year.
Details of the financial announcement and reasons for the decline
According to the official statement issued by the company on the Saudi Stock Exchange (Tadawul) website, this significant decrease in net profit is primarily due to the conservative accounting policies adopted by the company. Care International made substantial financial provisions during its audit for 2024 and the corresponding years. These provisions included provisions for expected credit losses on accounts receivable, as well as provisions for contract asset balances. This measure aims to strengthen the company's financial position and eliminate any doubtful debts from its balance sheet.
Operational performance: The bright side
Despite the pressure exerted by provisions on net profit, the company highlighted a significant positive aspect in its statement regarding operational efficiency. Care International achieved a notable increase in both its profit margin and operating profit. The company attributed this improved operational performance to increased efficiency in managing its electricity grid projects, indicating that its core business remains robust and capable of generating returns before accounting for exceptional provisions.
Context of the infrastructure sector in the Kingdom
These results come at a time when the contracting and infrastructure sector in Saudi Arabia is experiencing significant growth driven by Vision 2030 projects. Care International is a key player in the implementation of electrical and telecommunications network projects. Companies operating in this sector typically face challenges related to cash flow and receivables collection, leading them to set aside credit provisions in accordance with International Accounting Standards to ensure financial transparency.
The importance of allocations and their future impact
From an economic perspective, setting aside provisions—despite its immediate negative impact on profits—is viewed as a necessary corrective measure. It reflects management's pragmatism in dealing with financial obligations and paves the way for more stable financial results in the coming years once the reasons for these provisions disappear or the company succeeds in collecting receivables. Improved operating profits indicate that the company possesses the potential for future growth if it continues to enhance project management efficiency and control operating costs.
