Bawan Co. announces its Interim Financial results for the Period Ending on 2026-03-31 ( Three Months )

- One time recognition of non-cash bargain purchase gain (SR 126 million) related to acquisition of oil & Gas sector in Q1-2025

- The decrease in net profit of the electrical industries sector, mainly due to the decrease in quantities sold and average selling prices, resulting in a reduced gross profit margin.

- The decrease in net profit of wood products, mainly due to the decrease in quantities sold and average selling prices, resulting in a reduced gross profit margin.

- The increase in operating expenses, mainly due to the consolidation of operating expenses for the oil and gas industries sector for the entire current quarter.

- The increase in financing costs resulting from higher debt costs related to the acquisition of the oil and gas industries sector and the consolidation of working capital financing costs for the sector for the entire current quarter.

- The increase in zakat expenses.

This decrease comes despite the following:

- The recognition of revenues and profits for the oil and gas industries sector for the entire current quarter, compared to the recognition of revenues and net profit for the sector starting from February 13, 2025, for the same quarter of the previous year. Additionally, the sector's net profit increased during the current quarter compared to the same quarter of the previous year, mainly due to higher sales volumes and increased project completion percentage.

- The increase in the revenue and net profit of the plastics industries sector, mainly due to the increase in quantities sold and the sale of one of the sector's land.

- Achieving profit from metal products, compared to losses in the same quarter of the previous year, due to improved gross profit margin.

- The increase in other revenues.

- The increase in net profit of the metal and wood industries sector, mainly due to the increase in average selling prices of metal products, leading to an improved gross profit margin.

- The increase in net profit of the plastics industries sector, mainly due to the increase in quantities sold and the sale of one of the sector's lands.

- The increase in net profit of the oil and gas industries sector, mainly due to higher sales volumes and increased project completion percentage.

- The decrease in financing costs as a result of repaying a portion of the company's total debts.

- The decrease in the operating and zakat expenses.

- The increase in other income.

This increase comes despite the following:

- The decrease in net profit of the electrical industries sector, mainly due to the decrease in quantities sold, resulting in a reduced gross profit margin.

- The recording of depreciation and amortization expenses of SAR 42 million at the group level, mainly related to the amortization of intangible assets identified during the purchase price allocation (PPA) of Petronash.

The purchase price allocation (PPA), initially disclosed as under process in the Q1 2025 interim financial statements, was finalized in Q4 2025 [within the 12-month measurement period permitted by IFRS 3] and was reflected in the audited consolidated financial statements for the year ended 31 December 2025 where the full impact was accounted for in Q4 2025.

In line with IFRS requirements, the comparative figures for all the quarters in 2025 will be revised to reflect the normalized impact of the PPA related non-cash accounting adjustments. Accordingly, the comparative figures for the three months period ended 31 March 2025 have been revised to reflect the retrospective impact of finalized PPA.

It is worth noting that these are measurement period non-cash accounting adjustments under IFRS 3 and do not represent a correction of a prior period error under IAS 8.

Gross Profit: At the gross profit level, the Company recorded SR 156 million, representing a gross margin of 15% in Q1 2026. Excluding the non-cash PPA amortization charge of SR 36 million absorbed at cost of sales level, the underlying effective gross profit amounted to SR 192 million, reflecting an effective gross margin of 19%. This compares to an effective gross profit of SR 118 million (13% gross margin) in Q1 2025 and SR 196 million (18% gross margin) in Q4 2025.

Operating Income: On an operating income level, the Group recorded SR 78 million in Q1 2026. Adjusting for the same non-cash PPA charge of SR 42 million, the underlying effective operating income amounted to SR 120 million, compared to an effective operating income of SR 64 million in Q1 2025 and SR 101 million in Q4 2025.

EBITDA: The Group achieved earnings before interest, taxes, depreciation and amortization (EBITDA) of SAR 147 million during Q1 2026 as compared to EBITDA of same quarter of last year of SR 85.6 million.

Further, Bawan is closely monitoring the geopolitical situation in the region and will continue to effectively manage its supply chain, operational and customer-related risks across its industrial segments, leveraging pricing flexibility and inventory cover where appropriate. However, given the evolving nature of the situation, the potential long-term impact on the Group’s business will continue to be assessed on future reporting dates.

(Refer to attachment for more elaboration).