Tihama Advertising, Public Relations and Marketing Company, one of the oldest companies in the advertising sector in the Kingdom of Saudi Arabia, announced its preliminary financial results, which revealed a 320% increase in its net losses during the first nine months of its fiscal year ending December 31, 2023. The losses amounted to SAR 64.74 million, compared to a net loss of SAR 15.4 million recorded in the same period of the previous year, raising questions about the company's strategy and its ability to adapt to the rapidly changing market.
According to the official statement published by the company on the Saudi Stock Exchange (Tadawul) website, this significant increase in losses is due to several key factors. The most prominent of these is the recording of unrealized losses on financial assets at fair value, in contrast to the same period last year, which saw profits from the same item. Additionally, the company attributed the increased losses to a decrease in its share of the results of associates, a decline in other income due to the absence of bank deposits, as well as losses resulting from zakat settlements and higher losses from discontinued operations.
General context and historical background
Founded in 1974, Tihama has played a pivotal role in developing the advertising and marketing industry in the Kingdom for decades. However, like many traditional companies in the sector, it faces profound structural challenges. The biggest challenge is the digital transformation that has reshaped the advertising industry globally. The rise of digital platforms and social media has significantly shifted advertising budgets from traditional media (such as print and outdoor advertising) to digital channels, placing immense pressure on Tihama's legacy business models.
The importance of the event and its expected impact
Domestically, these financial results reflect the difficulties faced by established companies in keeping pace with the demands of Saudi Vision 2030, which places a strong emphasis on the digital economy and innovation. These losses are expected to negatively impact the company's share price on Tadawul and increase investor and shareholder anxiety. They also place significant pressure on the company's management to present a clear and convincing rescue plan for restructuring its operations and diversifying its revenue streams, perhaps through expanding digital services or exploring new markets.
Regionally, the case of Tihama is indicative of the general trend in the Middle East advertising market, where competition is intensifying and consumer behavior is rapidly changing. A company's ability to adopt new technologies and offer innovative marketing solutions has become the deciding factor for success and market survival. Therefore, Tihama's response to these challenges will be closely watched by competitors and analysts in the region as a case study in organizational transformation.
