East Pipes CEO says demand for oil and gas pipeline products remains strong. A 36.2% profit jump in Q1 and new work from Gulf infrastructure buildouts support the outlook.
Alpha Score of 67 reflects moderate overall profile with strong momentum, weak value, moderate quality, strong sentiment.
Mohammed Darweesh, chief executive of East Pipes Integrated Company for Industry, said demand for the pipe maker's products in water and energy infrastructure remains strong. The uncertainty surrounding the Strait of Hormuz is pushing Gulf states to build parallel pipeline networks, creating new opportunities for the company.
The comments came as East Pipes reported a 36.2% jump in net profit for the first quarter of its fiscal 2026/2027 year. Profit reached SAR 122.9 million from SAR 90.2 million a year earlier, the company said. Revenue rose 35%, supported by higher sales volumes and higher average selling prices. EBITDA increased about 32% year on year while the gross profit margin held near 28%, Darweesh said in an interview with Argaam.
The company is focused on rehabilitating Saudi Aramco's East–West Pipeline and the Master Gas 3 project, along with water infrastructure for the Qiddiya development. The Jafurah gas field represents a major growth driver because it requires new pipeline networks rather than upgrades, boosting demand for helical submerged arc welding (HSAW) pipes, Darweesh said.
Geopolitical tensions have affected supply chains and logistics costs, not underlying demand, the CEO said. East Pipes rerouted raw material imports through Jeddah and Yanbu ports, raising freight, handling, and insurance costs. The company is pursuing recovery of those costs through contractual mechanisms with customers. Darweesh said the claims are progressing well and are expected to offset much of the impact over the coming quarters.
A portion of the logistics cost increase may affect next quarter's financial results, Darweesh said. Limited berthing availability at Jeddah Port continues to create operational challenges for imported raw materials. The company has responded by accelerating inland transportation through multiple logistics providers, he said.
Water sector projects originally scheduled for award in 2026 have been pushed to 2027. Darweesh described the delay as a timing shift, not a deterioration in demand. Manufacturing facilities operated at utilization rates well above the industry average of 65% to 70%, he added.
East Pipes held a record cash balance of about SAR 800 million and generated free cash flow of SAR 248 million in the quarter, a 47.6% margin. The company remains debt-free. Darweesh said maintaining a debt-free balance sheet is not an objective in itself. The capital structure will be evaluated based on long-term strategic direction and expansion plans.
Saudi Aramco's roughly $11 billion lease-and-leaseback transaction with a consortium led by Global Infrastructure Partners, part of BlackRock, underscores long-term capital commitment to gas infrastructure, Darweesh said. Additional studies on new water security projects, including Master Gas 4 and the Riyadh–Qassim, Jubail-Burydah, and Ras Mohaisen water lines, are also expected to support future business, he said.
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