Bawan expects strong H2 on Vision 2030 projects: CEO

Zeyad Al Barrak, CEO of Bawan Co.

Bawan Co.'s businesses continue to see healthy order activity, supported by investment programs linked to Saudi Vision 2030, Chief Executive Zeyad Al Barrak told Argaam.

Recent additions to Bawan's business portfolio have significantly broadened and diversified its earnings base, providing the company with a stronger operational foundation and solid momentum heading into the second half of 2026, he said.

Al Barrak said the Metals segment was the largest contributor to second-quarter 2026 revenue, while the oil and gas segment generated the highest profit. He added that fluctuations in results reflected the timing of project execution rather than weaker demand.

The plastics segment delivered strong performance, with revenue rising more than 30% year on year (YoY), supported by higher sales volumes, improved pricing and solid demand from the construction, packaging and food sectors, he said.

Meanwhile, the electricity and wood segments continued to face challenging market conditions. The electricity segment was pressured by lower volumes and weaker pricing, while the wood segment operated in a difficult market despite improving margins. Al Barrak said he remains optimistic about a gradual recovery.

The company also continues to face supply-chain challenges, including higher freight costs, longer procurement lead times and shipping delays, but is working to mitigate their impact through supplier diversification and measures to strengthen supply continuity, he said.

Commenting on the company's second-quarter results, Al Barrak said reported net profit rose 68.9% YoY to SAR 53.9 million. Excluding non-cash purchase price allocation amortization, adjusted net profit increased to SAR 78 million from SAR 50 million a year earlier, reflecting stronger underlying operating performance.

Adjusted first-half 2026 net profit nearly doubled to SAR 164 million from SAR 87 million a year earlier, while operating income rose 35%, EBITDA increased 33%, and gross margin expanded to 19% from 15%, driven by stronger contributions from the oil and gas segment, improving margins in Metals, robust growth in Plastics and disciplined execution across the group.

Demand remained healthy across all businesses during the second quarter, although performance varied by segment, Al Barrak said. Metals accounted for about 32% of total revenue, followed by oil and gas at around 30%. Oil and gas remained the group's largest profit contributor, while the sequential decline in revenue reflected the project-based nature of the business and the timing of contract execution rather than weaker underlying demand.

The regional geopolitical environment remained highly volatile during the first half of 2026, but project execution largely continued as planned and customer engagement remained positive across the group's operating segments, he said.

Al Barrak said the company continues to face supply-chain disruptions, including higher freight costs, longer procurement lead times, shipping delays and force majeure declarations by some customers and suppliers on certain shipments. In response, Bawan has diversified sourcing, adjusted shipping routes where necessary and worked closely with suppliers and logistics partners to maintain supply continuity, while its multi-country sourcing strategy has reduced dependence on any single market.

Management found no indicators of asset impairment across the group's businesses during the first half, reflecting confidence in the portfolio's underlying earnings potential despite the current operating environment, he added.

The company continues to take a cautious approach to opportunities in the oil and gas segment, which is primarily driven by long-term energy investment programs in Saudi Arabia and the Gulf rather than short-term geopolitical developments. While regional conditions could create indirect opportunities over time, they also increase uncertainty through oil price volatility and logistical disruptions, Al Barrak said.

Bawan does not comment on ongoing project negotiations unless required under regulations, he said, but added that demand remains healthy across its businesses, supported by Vision 2030 investment programs and recent portfolio additions that have further diversified and strengthened its earnings base.

The company does not provide earnings guidance, but enters the second half of 2026 with strong operational momentum following a solid first half and remains focused on disciplined execution, Al Barrak said.