Watani Iron Steel Co (9513.SR) delivered a mixed QQ2 2025 performance on a revenue basis but with a clear deterioration in profitability and modest liquidity. Revenue for Q2 2025 was SAR 97.52 million, representing a YoY increase of 39.66% but a QoQ decline when compared with the preceding quarter’s SAR 119.47 million. Despite EBITDA turning positive at SAR 4.89 million (EBITDA margin of ~5.02%), the company posted an operating loss of SAR 1.14 million and a net loss of SAR 1.76 million for the quarter, leading to a negative EPS of SAR -0.0097. The negative net result reflects elevated depreciation and amortization (SAR 5.27 million) and interest expense (SAR 1.46 million), which together overwhelm a modest gross profit of SAR 1.34 million and weigh on overall profitability.
From a liquidity perspective, Watani exhibits ongoing balance-sheet headwinds: current ratio 0.851, quick ratio 0.240, and cash ratio 0.164, indicating limited near-term liquidity cushions. The company’s conservative working capital dynamics are reflected in a cash conversion cycle of ~18.69 days, but the business remains exposed to working-capital volatility given receivables turnover (~38.36 days) and inventory turnover (~2.46x). On a supportive note, operating cash flow per share stands at SAR 0.0168 and free cash flow per share at SAR 0.00418, suggesting incremental cash generation despite the quarterly bottom-line weakness.
Comparatively, Watani’s current profitability and margins lag several Saudi peers. The group trades with a negative trailing P/E and modest margins relative to peers exhibiting stronger gross margins (e.g., peer 4180.SR with gross margin ~38% and operating margin ~91%), signaling substantial competitive and cost-structure gaps. Nonetheless, the stock maintains a reasonable price-to-book around 1.53 and price-to-sales near 1.98, reflecting market capitalization that prices in potential upside from industry infrastructure activity and any normalization in cost structures. Investors should watch for improvement in gross margin, controlled depreciation and interest costs, and a recovery in working capital efficiency to sustain a positive earnings trajectory.