Najran Cement Deal Cuts Production Cost-Hike Estimate

Najran Cement signed an agreement with Saudi Arabia's Industrial Sector Competitiveness Program to contain the hit from higher fuel prices, the company said in a filing. The deal provides technical and financial support for lowering energy use.

The expected increase in production costs dropped to 8% from 11% after the agreement. The program is a national initiative that helps companies adopt energy-efficient technology and diversify fuel sources, according to the filing. Najran said the 3-percentage-point improvement comes from those subsidies and its own internal cost measures. The benefit will show up in second-quarter 2026 results.

The fuel price adjustment hit hard in the first quarter. Najran's net profit fell 64.46% to SAR 6.1 million compared with the same period last year. The company said it is also executing cost-reduction plans internally, focusing on production capacity and spending controls.

Cement production is energy-intensive. Fuel is the largest variable input cost. The original 11% increase would have deepened the margin squeeze. The company said the deal gives it room to adjust pricing and operations without passing the full increase to customers.

Q2 2026 is the next test. That is when the financial statements will show whether the program delivered the promised margin relief.