Najran Cement Q1 profit fell 64% to SAR 6.1m as sales slipped 9%. The sequential drop from Q4 was steeper; Q2 volume recovery is the next catalyst.
Alpha Score of 15 reflects poor overall profile with poor momentum, poor value, moderate quality. Based on 3 of 4 signals – score is capped at 90 until remaining data ingests.
Najran Cement Company reported first-quarter 2026 net profit of SAR 6.10 million, a 64.46% decline from SAR 17.19 million a year earlier. Sales fell 9.03% to SAR 123.01 million, and earnings per share dropped to SAR 0.04 from SAR 0.10. The earnings collapse on a single-digit revenue dip reveals an operating leverage problem: fixed costs did not flex downward with volumes.
The income statement shows a SAR 12.23 million revenue decline wiping out nearly all the incremental profit a smaller top-line dip would normally protect. Net income shrank SAR 11.09 million, a drop that absorbed over 90% of the lost sales. Saudi cement producers carry high operating leverage. Fuel, power, and plant maintenance lines do not shrink when dispatches fall by single digits. Pricing discipline adds another variable: if competitive pressure forced lower net realisation per tonne, the revenue drop understates the volume hit. Without a tonnage and pricing breakdown, the market reads the margin damage through the earnings hole itself, and the hole is large.
Energy costs form a critical part of that fixed-cost base. Movements in crude oil and regional fuel pricing feed directly into the kiln and logistics expense lines. When volumes weaken, those input costs remain sticky, compressing margins at a rate that far exceeds the sales decline. The Q1 result is a textbook case of that dynamic.
The quarter-on-quarter comparison removes the year-ago base effect and shows momentum. Profit fell 48.95% from the SAR 11.96 million recorded in Q4-2025. Revenue dropped 7.86% from SAR 133.51 million. This sequential pairing suggests the slowdown intensified through the turn of the year rather than stabilising at a lower level.
Seasonal patterns can explain some first-quarter softness in the kingdom’s cement sector, as project activity typically slows through the cooler months. A fall of this magnitude, however, runs deeper than calendar effects. It indicates that the demand environment weakened beyond what normal seasonal planning would have priced in, leaving the cost structure exposed.
The Q1 print extends a trajectory visible in the full-year 2025 accounts. Najran Cement reported SAR 36.74 million in 2025 net profit, a 46.30% drop from SAR 68.42 million the prior year. Annualised, the current Q1 run-rate of SAR 6 million puts the company on course for roughly SAR 24 million, a further step down from the already-depressed 2025 base.
That context reframes the stock’s valuation. A company that earned SAR 68 million two years ago is now earning at a pace one-third of that level. The market’s pricing mechanism must reconcile a shrinking earnings stream with any residual growth premium that may still be embedded in the share price.
The next catalyst is the second quarter, when Saudi construction demand normally picks up and government-led project spending often accelerates. An improvement in sales back toward the SAR 130 million level would demonstrate that the Q1 dip was partly transitory. A second consecutive sub-SAR 125 million quarter would confirm that demand erosion, not seasonal timing, is the dominant force.
The commodities analysis lens matters here: cement is a local-for-local industrial material, yet the sector’s margin structure mirrors the energy and logistics costs that feed into bulk commodities globally. Any relief on input costs would help. The critical variable remains volume. Without volume recovery, fixed-cost absorption cannot improve, and earnings will remain anchored at levels that the Q1 report has just reset lower.
Prepared with AlphaScala research tooling and grounded in primary market data: live prices, fundamentals, SEC filings, hedge-fund holdings, and insider activity. Each story is checked against AlphaScala publishing rules before release. Educational coverage, not personalized advice.