Bawan Co. reported a strong order backlog and positive momentum in early 2026, aided by clear revenue visibility from confirmed contracts, CEO Zeyad Al-Barrak told Argaam in an interview.
However, geopolitical developments since late February have raised uncertainty, particularly around logistics and input costs, he told Argaam.
These challenges remain variable and difficult to fully assess, despite proactive monitoring and management. Meanwhile, demand fundamentals are still strong, backed by the gas expansion program and investments in housing and urban development.
The oil and gas segment is expected to continue supporting profitability in 2026, he added.
Al-Barrak also noted that growing focus on digital infrastructure and AI-related data centers in the Kingdom is creating new demand opportunities aligned with the company’s capabilities. Bawan’s electrical segment has entered modular data center solutions, with significant growth potential alongside its traditional products.
Bawan remains committed to its strategy, though the pace of results in 2026 may be impacted by regional developments, he explained.
Expanding the group’s portfolio—through the addition of oil and gas activities, and growth in the electrical business —has reduced reliance on a single business line, in line with strategy. A strong and diversified 2026 order backlog should help absorb any potential slowdown.
The company is closely monitoring regional developments, prioritizing employee safety while maintaining normal operations within the Kingdom. Most operations and supply chains are either domestic or diversified, supported by strategic inventories that limit disruption.
Logistics challenges include higher shipping costs, supply delays and some force majeure cases. The company is taking precautionary measures and working with suppliers to manage these sector-wide pressures.
Al-Barrak explained the disruptions are impacting all market players, including foreign firms, easing pricing pressure and offering some advantages to local producers. However, cost and logistics challenges still outweigh these benefits.
A ceasefire agreement marks an initial step toward broader talks, though it is too early to assess its durability, he added.
On Bawan’s financial results, Al-Barrak said year-on-year (YoY) growth in the Q4 2025 net profit was driven by the full contribution of the oil and gas segment following the Petronash acquisition. The quarter included around SAR 5 million in net non-cash purchase price allocation settlements. Excluding these, underlying operating performance was strong and in line with expectations.
Adjusted operating profit of around SAR 100 million should not be seen as a baseline for each quarter, given volatility—particularly in the project-driven oil and gas segment.
He said the Petronash acquisition, alongside expansion in the electrical and plastics segments and investments in new products, has structurally enhanced profitability, though results remain tied to project timing and market conditions.
Moreover, the oil and gas business, via Petronash, was the largest contributor to fourth-quarter 2025 revenue growth, driven by deliveries under long-term agreements for specialized products.
The electrical segment maintained strong momentum, backed by rising demand for transformers and switchgear, growth in new products, higher exports, and expansion into medium-voltage solutions and international markets.
The plastics segment also contributed positively, supported by new product launches including paper packaging solutions, and demand from construction and food industries.
The metals and wood segment saw a relative decline in revenue and profitability due to lower prices in some categories. The company is managing the segment with a focus on higher-margin products and operational efficiency rather than volume growth.
Demand across sectors remains strong, supported by Vision 2030 targets and major infrastructure and energy projects.
Revenue grew about 35% YoY in Q4 2025, mainly due to consolidating Petronash results and organic growth in the electrical and plastics segments. Completion of purchase price allocation led to around SAR 121 million in non-cash charges for 2025, booked in the fourth quarter, including SAR 99 million in cost of revenue, distorting reported margins.
Despite a gain from a bargain purchase offsetting much of these costs at the net profit level, margins were distorted, with reported gross margin falling from around 18% to 9%, not reflecting underlying performance.
Excluding these non-cash items, margins improved from 15% in Q3 2025 to 18% in the fourth quarter, and rose from 11% in 2024 to 16% in 2025, reflecting business quality.
Amortization related to purchase price allocation is expected to decline gradually, allowing reported margins to better reflect operating performance.
According to Argaam data, Bawan’s net profit rose to SAR 218.3 million in 2025, up from SAR 106 million a year earlier.
Bawan Co. reported a strong order backlog and positive momentum in early 2026, aided by clear revenue visibility from confirmed contracts, CEO Zeyad Al-Barrak told Argaam in an interview.
However, geopolitical developments since late February have raised uncertainty, particularly around logistics and input costs, he told Argaam.
These challenges remain variable and difficult to fully assess, despite proactive monitoring and management. Meanwhile, demand fundamentals are still strong, backed by the gas expansion program and investments in housing and urban development.
The oil and gas segment is expected to continue supporting profitability in 2026, he added.
Al-Barrak also noted that growing focus on digital infrastructure and AI-related data centers in the Kingdom is creating new demand opportunities aligned with the company’s capabilities. Bawan’s electrical segment has entered modular data center solutions, with significant growth potential alongside its traditional products.
Bawan remains committed to its strategy, though the pace of results in 2026 may be impacted by regional developments, he explained.
Expanding the group’s portfolio—through the addition of oil and gas activities, and growth in the electrical business —has reduced reliance on a single business line, in line with strategy. A strong and diversified 2026 order backlog should help absorb any potential slowdown.
The company is closely monitoring regional developments, prioritizing employee safety while maintaining normal operations within the Kingdom. Most operations and supply chains are either domestic or diversified, supported by strategic inventories that limit disruption.
Logistics challenges include higher shipping costs, supply delays and some force majeure cases. The company is taking precautionary measures and working with suppliers to manage these sector-wide pressures.
Al-Barrak explained the disruptions are impacting all market players, including foreign firms, easing pricing pressure and offering some advantages to local producers. However, cost and logistics challenges still outweigh these benefits.
A ceasefire agreement marks an initial step toward broader talks, though it is too early to assess its durability, he added.
On Bawan’s financial results, Al-Barrak said year-on-year (YoY) growth in the Q4 2025 net profit was driven by the full contribution of the oil and gas segment following the Petronash acquisition. The quarter included around SAR 5 million in net non-cash purchase price allocation settlements. Excluding these, underlying operating performance was strong and in line with expectations.
Adjusted operating profit of around SAR 100 million should not be seen as a baseline for each quarter, given volatility—particularly in the project-driven oil and gas segment.
He said the Petronash acquisition, alongside expansion in the electrical and plastics segments and investments in new products, has structurally enhanced profitability, though results remain tied to project timing and market conditions.
Moreover, the oil and gas business, via Petronash, was the largest contributor to fourth-quarter 2025 revenue growth, driven by deliveries under long-term agreements for specialized products.
The electrical segment maintained strong momentum, backed by rising demand for transformers and switchgear, growth in new products, higher exports, and expansion into medium-voltage solutions and international markets.
The plastics segment also contributed positively, supported by new product launches including paper packaging solutions, and demand from construction and food industries.
The metals and wood segment saw a relative decline in revenue and profitability due to lower prices in some categories. The company is managing the segment with a focus on higher-margin products and operational efficiency rather than volume growth.
Demand across sectors remains strong, supported by Vision 2030 targets and major infrastructure and energy projects.
Revenue grew about 35% YoY in Q4 2025, mainly due to consolidating Petronash results and organic growth in the electrical and plastics segments. Completion of purchase price allocation led to around SAR 121 million in non-cash charges for 2025, booked in the fourth quarter, including SAR 99 million in cost of revenue, distorting reported margins.
Despite a gain from a bargain purchase offsetting much of these costs at the net profit level, margins were distorted, with reported gross margin falling from around 18% to 9%, not reflecting underlying performance.
Excluding these non-cash items, margins improved from 15% in Q3 2025 to 18% in the fourth quarter, and rose from 11% in 2024 to 16% in 2025, reflecting business quality.
Amortization related to purchase price allocation is expected to decline gradually, allowing reported margins to better reflect operating performance.
According to Argaam data, Bawan’s net profit rose to SAR 218.3 million in 2025, up from SAR 106 million a year earlier.
