Al Arabia’s 2024 results delayed on projects requiring precise accounting: CEO

Mohammed Al-Khariji, CEO of Arab Contracting Co. (Al Arabia)

Mohamed Al-Khariji, CEO of Arabian Contracting Services Co. (Al Arabia), said the delay in the disclosure of the 2024 annual results had been in the company's favor, confirming the timely release of the first-quarter results within the statutory period.

In an interview with Al Arabiya TV, Al-Khariji attributed the disclosure delay to Al Arabia’s recent award of large-scale, qualitative projects.

These projects involved intricate details that required the adoption of a precise accounting standard to eliminate any material discrepancies in financials throughout the contracts’ terms, he added.

This reflected the company's actual results over the respective durations, in line with its annual performance. This came in consultation with the external auditor to ensure the correct selection of the accounting standards, said the top executive.

Regarding the 15% decline in the full-year profis, Al-Khariji pointed out that the recently-awarded major projects are not yet fully operational, and the associated costs are only partially emerging, paired with the impact of financing costs (FCs).

The CEO explained that the accounting standard focuses on allocating a large portion of these costs in the initial contractual years in order to incur less costs in the future.

He stated that FCs related to the Faden Media deal are considered high and are currently under study for restructuring and significant reduction. This drop in borrowing costs is likely to be fundamentally reflected in Q1 2025 results after the signing of a refinancing agreement.

“The company is well established in the market, having won major projects over the past year in Riyadh, Dubai, and Cairo. These cities are deemed core markets in terms of outdoor advertising volumes,” said Al-Khariji.

Al Arabia, according to the top executive, deemed the largest in the region’s advertising market in terms of revenue. This in turn places the company in direct competition with social media companies such as Google and Meta, indicating that winning major contracts in the region gives it an edge that enables attaining a larger market share.

The CEO also stated that Al Arabia is the only entity in the region capable of developing the advertising market, which still shapes only about 1% of the global scene. However, he sees great potential for an increase in this share to 2-3%.

"Our primary goal is to considerably expand our network, which will achieve economies of scale in our business, strengthen our economic position, and significantly impact the profitability of new projects,” he said.

According to Argaam’s data, Al Arabia's profits fell by 15% to SAR 271.3 million by the end of 2024, compared to SAR 318.2 million in 2023.