Watani Iron Steel Co reported a challenging start to QQ1 2025 with revenue of SAR 119.5 million, down 12.8% year over year and 14.5% quarter over quarter. Despite the top-line pressure, the company delivered a positive EBITDA of SAR 9.61 million and a net income of SAR 2.87 million, translating to EBITDA margin of 8.04% and net margin of 2.40%. The quarter benefited from margin resilience and cost discipline, with operating income of SAR 4.15 million and an operating margin of 3.47%. The tax rate was modest at 3.8%, and earnings per share stood at SAR 0.0158. The results reflect a narrative of volume weakness offset by efficiency gains and favorable product mix, though the momentum is constrained by weaker demand signals in the near term.
However, Watani’s liquidity profile remains tight. Key short-term metrics show a current ratio of 0.77, a quick ratio of 0.19, and a cash ratio of 0.092, indicating limited near-term liquidity headroom. Cash flow indicators are negative on a per-share basis (operating cash flow per share: -0.0351; free cash flow per share: -0.0405), and capex coverage remains a constraint (negative capex coverage metrics). The balance sheet carries a moderate debt burden (debt ratio 0.191; debt/equity 0.267) with an interest coverage of 3.04x, suggesting the ability to service debt, albeit with limited cushion.
Looking ahead, the absence of formal forward guidance in the disclosed data requires a cautious approach. Any sustained upside will depend on a rebound in steel demand in Saudi Arabia, stabilization or reduction in raw material costs, and disciplined capital allocation to convert EBITDA gains into positive free cash flow. Investors should monitor working capital dynamics, capex plans, and the trajectory of construction activity in the Kingdom as the primary catalysts for Watani’s next leg of earnings growth.