Tabuk Agricultural Development Company (Tabuk Agriculture), a leading company in the Kingdom’s agricultural sector, announced that its Board of Directors has approved a strategic investment agreement with Ruwad Industry and Development Company. Under this agreement, Tabuk Agriculture will lease its vineyards for ten years, a move aimed at maximizing the value of its assets and transforming a previously loss-making sector into a stable and sustainable source of income.
Details of the deal and its financial implications
According to the official statement issued by the company and published on the Saudi Stock Exchange (Tadawul), the total value of the contract is SAR 23,352,000 , to be collected over the 10-year contract period. The agreement includes a two-phase investment in the vineyards. The first phase will cover 123 hectares until 2029, and will then expand to 196 hectares by the end of the contract. Under the agreement, Rawad Al-Sina’a wa Tatweer Company will bear all operational costs associated with the agricultural activity throughout the investment period, thus reducing operational risks for Tabuk Agricultural Development Company.
Historical background: From accumulated losses to sustainability
This move comes as a radical solution to a long-standing problem. The company's statement revealed that the grape sector had incurred accumulated losses of SAR 57.18 million over the past ten years, averaging an annual loss of approximately SAR 5.7 million. Through this contract, Tabuk Agricultural Development Company successfully transforms an agricultural asset with a book value of SAR 8.5 million from a source of loss into a source of stable rental income, reflecting a strategic shift in the management of underutilized assets.
Strategic importance and alignment with the Kingdom's Vision 2030
This transaction is particularly significant as it aligns with the goals of Saudi Vision 2030, which focuses on enhancing the efficiency of the private sector, diversifying income sources, and achieving food security. Through this partnership with a specialized private sector entity, Tabuk Agricultural Development Company (TADCO) ensures the continuity and efficiency of its production, allowing it to focus on its other core activities. Domestically, this partnership is expected to improve the company's financial performance indicators, increase its attractiveness to investors, and strengthen its long-term financial stability. Regionally, this transaction provides a successful model for how major agricultural companies can restructure their assets to address operational challenges and achieve profitability.
Expected financial impact and future
The positive financial impact of the contract is expected to begin appearing in Tabuk Agricultural Development Company's financial statements starting in the first quarter of 2026 and continuing until the end of the contract. The main benefits include achieving stable cash flows, completely halting losses in the grape sector, and maximizing the value of the invested asset. This contract represents a significant shift in the company's strategy, establishing a new phase of sustainable growth and a focus on operational efficiency and profitability.
