Al-Othaim Markets recorded a significant decrease of 51% in profits during 2025, reaching 250 million Saudi riyals, compared to a net profit of 511 million riyals in the previous year, 2024. This decline reflects strategic shifts and operational challenges facing the company in a highly competitive environment that requires high flexibility in pricing and marketing.
The reasons behind the decline in Al-Othaim Markets' profits
The company clarified in its official statement published on the Saudi Stock Exchange (Tadawul) website that the comparison with the previous year included exceptional factors. The 2024 results included non-recurring profits of approximately SAR 161.3 million (after deducting zakat) resulting from the initial public offering (IPO) of the Fourth Milling Company, in addition to the reversal of zakat provisions for prior years amounting to SAR 17.7 million. Once these non-recurring items are excluded, the decrease in net operating profit is reduced to 24.7%. This decline is primarily attributed to lower profit margins, a direct result of the company's policy of offering intensive promotional deals and discounts to maintain its market share—a strategy that has already yielded a 3.03% increase in total sales.
Operational expansion and its impact on costs
The impact wasn't limited to promotional offers; it extended to increased operating costs associated with multiple sales channels. Financial results were also affected by higher expenses related to opening new branches that had been operational for less than two years. Among the most significant of these costs was the financing of lease contracts, calculated according to IFRS 16, which placed additional pressure on net profit margins during this period.
A pioneering journey in the Saudi retail sector
Abdullah Al Othaim Markets Company is one of the most important and largest retail chains in Saudi Arabia and the region. Since its establishment in 1956, the company has grown from a small enterprise into a massive commercial entity with hundreds of branches spread throughout the Kingdom and beyond. This long history has made the company a cornerstone of the consumer goods sector, playing a vital role in meeting the daily needs of millions. Therefore, any change in its financial performance is an important indicator reflecting the overall state of the retail sector and consumer trends in the local market.
Bright spots in financial and operational performance
Despite the overall decline in net income, the financial statements revealed positive aspects reflecting the diversification of the company's investments. The current period witnessed a marked improvement in the performance of affiliated companies. Rental income also increased, driven by the leasing of new commercial spaces, growth in finance lease income, and the renewal of the lease for the commercial complex in Dammam. Furthermore, the labor services sector of Mu'een Human Resources Company recorded increased profits, coinciding with the parent company's success in reducing its administrative and general expenses.
Economic repercussions and dividend distributions
The financial performance of major retailers carries significant implications for the local economy. Despite challenges that led to a decline in profits, the company demonstrated the strength of its financial position and its ability to continue rewarding its shareholders. The Board of Directors approved the distribution of interim cash dividends for the fourth quarter of 2025, in accordance with the approved dividend policy. The total amount to be distributed is SAR 54 million, at SAR 0.06 per share. The company set the record date as March 26, with cash dividend payments to shareholders commencing on April 9, further reinforcing investor confidence in the company's stability and its ability to generate sustainable cash flows.
