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Saudi Catering Inks $2.4 Bn Concession Deals with Red Sea Global

The Red Sea Global project in Saudi Arabia. (Asharq Al-Awsat)
The Red Sea Global project in Saudi Arabia. (Asharq Al-Awsat)
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Saudi Catering Inks $2.4 Bn Concession Deals with Red Sea Global

The Red Sea Global project in Saudi Arabia. (Asharq Al-Awsat)
The Red Sea Global project in Saudi Arabia. (Asharq Al-Awsat)

Saudi Airlines Catering Company (SACC) signed two contracts with Red Sea Global (RSG) at a total value of $2.4 billion.

The Saudi Tadawul announced a one-day trading halt on Saudi Catering's stock, which came under the company's request before disclosing a material event. Trading on the shares will resume on Tuesday.

The first contract included designing, building, operating, and transferring a central laundry to serve hotels, resorts, and other facilities and sectors at the Red Sea project, valued at $720 million.

The second includes designing, building, operating, and transferring a central production unit for catering and facilities management services.

It will serve RSG's employees at hotel establishments and resorts and other facilities and sectors across the Red Sea destination at an estimated value of $ 1.6 billion.

Each contract is valid for 20 years, said Saudi Catering, adding that it expects a positive contribution to be shown in its accounts by Q3 2025.

The contracts are set to boost the company's business sustainability by increasing its cash flow and strengthening its business.

Furthermore, they come as part of Saudi Catering's strategic plan to attract investment opportunities in new industrial and tourist cities.

The statement said that the two contracts, subject to the RSG board's final sign-off, are part of the strategic plan implemented by Saudi Airlines Catering to attract investment opportunities in new industrial and tourist cities.

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Saudi Arabia Sees Highest Level of Non-oil Private Sector Activity in 4 Months

The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders. (Asharq Al-Awsat)
The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders. (Asharq Al-Awsat)
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Saudi Arabia Sees Highest Level of Non-oil Private Sector Activity in 4 Months

The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders. (Asharq Al-Awsat)
The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders. (Asharq Al-Awsat)

Business activity in Saudi Arabia's non-oil sector accelerated to a four-month high in September, driven by strong demand, which led to faster growth in new orders. The Riyad Bank Saudi Arabia Purchasing Managers' Index (PMI), adjusted for seasonal factors, rose to 56.3 points from 54.8 in August, marking the highest reading since May and further distancing itself from the 50.0 level that indicates growth.

The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders, alongside challenges in supply. The improvement in business conditions contributed to a significant rise in employment opportunities, although difficulties in finding skilled workers led to a shortage in production capacity.

At the same time, concerns over increasing competition caused a decline in future output expectations. According to the PMI statement, inventories of production inputs remained in good condition, which encouraged some companies to reduce their purchasing efforts.

Growth was strong overall and widespread across all non-oil sectors under study. Dr. Naif Al-Ghaith, Senior Economist at Riyad Bank, said that the rise in Saudi Arabia's PMI points to a notable acceleration in the growth of the non-oil private sector, primarily driven by increased production and new orders, reflecting the sector’s expansionary activity.

Al-Ghaith added that companies responded to the rise in domestic demand, which plays a crucial role in reducing the Kingdom's reliance on oil revenues. The upward trend also indicates improved business confidence, pointing to a healthy environment for increased investment, job creation, and overall economic stability.

He emphasized that this growth in the non-oil sector is particularly important given the current context of reduced oil production and falling global oil prices. With oil revenues under pressure, the strong performance of the non-oil private sector acts as a buffer, helping mitigate the potential impact on the country's economic conditions.

Al-Ghaith continued, noting that diversifying income sources is essential to maintaining growth amid the volatility of oil markets. He explained that increased production levels not only enhance the competitiveness of Saudi companies but also encourage developments aimed at expanding the private sector's participation in the economy.

This shift, he said, provides a more stable foundation for long-term growth, making the economy less susceptible to oil price fluctuations.