MEPCO Reports First-Quarter Net Loss as Lower Selling Prices Pressure Earnings

Middle East Paper Company (MEPCO) reported lower revenue and a net loss for the first quarter of 2026 as reduced average selling prices and impairment charges weighed on profitability despite ongoing cost-cutting measures and stable sales volumes.

The Saudi paper manufacturer posted revenue of SAR 244.3 million for the quarter ended March 31, down 6% from SAR 259.1 million a year earlier. Operating profit declined 64% to SAR 4.8 million from SAR 13.2 million in the prior-year period. Net loss attributable to shareholders reached SAR 2.0 million, compared with a profit of SAR 5.3 million in the first quarter of 2025.

MEPCO said softer market prices across certain product segments offset relative improvements in sales volumes. Gross profit fell 22% year over year to SAR 26.6 million, while the company recorded a SAR 4.0 million impairment charge during the quarter. Finance income also declined 24% to SAR 4.8 million.

The company said cost-control measures helped partially mitigate the decline in profitability. Selling and distribution expenses fell 32% year over year, while general and administrative expenses decreased 22%.

Chairman Musab Sulaiman Al-Muhaidib said MEPCO remained focused on long-term growth and sustainability initiatives aligned with Saudi Arabia’s Vision 2030 strategy. Chief Executive Officer Faisal Haddawi said the company continued to prioritize operational efficiency and strategic investments despite challenging market conditions.

MEPCO continued to invest in capacity expansion projects, including Paper Machine-5 and Tissue Machine-6, which are expected to be completed before the end of 2027 and 2026, respectively. Property, plant and equipment increased 8% to SAR 1.55 billion as of March 31, 2026.

Total debt rose 10% to SAR 789.0 million at the end of the quarter, while net debt increased 48% to SAR 325.2 million. Cash and short-term deposits declined 6% to SAR 463.8 million.