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Saudi Military Industry Flourishes: Localization Surge to 13.6%

An image from the inaugural World Defense Show north of Riyadh. (Supplied)
An image from the inaugural World Defense Show north of Riyadh. (Supplied)
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Saudi Military Industry Flourishes: Localization Surge to 13.6%

An image from the inaugural World Defense Show north of Riyadh. (Supplied)
An image from the inaugural World Defense Show north of Riyadh. (Supplied)

The Saudi government is starting to see positive results from its efforts to boost the military, defense, and security industries. The localization rate of the sector has jumped from 4% to 13.6% by the end of 2022, a significant increase of 9.6%.
Furthermore, 477 licenses were issued for the establishment of 265 companies.
In Riyadh, Defense Minister Prince Khalid bin Salman inaugurated the World Defense Show 2024, attended by defense ministers and officials from various countries, along with specialized companies.
The exhibition is being held in the Saudi capital city for the second time after its debut in 2022, featuring the latest innovation across the defense sector.
Ahmed Al-Ohali, governor of the General Authority for Military Industries (GAMI), stressed the importance of unlimited government support to strengthen the sector.
This support aims to enhance the Kingdom’s strategic capabilities, promote the localization of national military industries, and align with the vision for the future.
Government Spending Boosts Defense Industry in Saudi Arabia
Saudi Arabia is boosting its defense and security industries with strong government support. This push aims to advance these sectors and fulfill the localization goal of 50% of government spending on military equipment and services, as outlined in the national transformation plan, “Vision 2030.”
Al-Ohali stated that the Kingdom is already seeing positive outcomes, with the localization rate increasing from 4% to 13.6% by the end of 2022. Furthermore, 477 permits and licenses were issued for 265 companies in the military industries sector, creating over 74 investment opportunities for localizing the supply chain.
The governor highlighted the sector’s expected contribution to the GDP, reaching around SAR 93.75 billion ($25 billion) by 2030. It is anticipated to generate 40,000 direct job opportunities and 60,000 indirect job opportunities in the same year.
International Partnerships
Emphasizing the World Defense Show’s significance as a crucial platform for experts and industry professionals, Al-Ohali affirmed that “the second edition of this leading international event in the defense and security industry in the Kingdom is an extension of the successes and achievements witnessed in the inaugural edition.”
“The exhibition will strategically support the nation's efforts towards achieving localization targets and provide an ideal environment for communication and interaction among participants,” added Al-Ohali.
“The aim is to enhance international partnerships in the defense and security industry, contributing to the vision of our beloved Kingdom through technology transfer and competence development support.”

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Business

Saudi Arabia Revises Electricity, Water Tariffs, Announces Monthly Support

A Saudi Energy employee at work. (SPA)
A Saudi Energy employee at work. (SPA)
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Saudi Arabia Revises Electricity, Water Tariffs, Announces Monthly Support

A Saudi Energy employee at work. (SPA)
A Saudi Energy employee at work. (SPA)

Saudi Arabia will revise electricity, water and wastewater tariffs from January 1, 2027, to improve consumption efficiency and sustain essential services, while introducing monthly financial support for eligible citizens to ease the impact on living costs.

Custodian of the Two Holy Mosques King Salman bin Abdulaziz ordered the support measures following a proposal by Prince Mohammed bin Salman, Crown Prince and Prime Minister.

The package includes SAR 500 ($133) in monthly assistance for eligible groups and a phased increase in the minimum wage required for Saudi employees to count fully toward Saudization quotas under the Nitaqat program.

Saudi Energy and the National Water Company announced the tariff revisions, covering residential, non-residential and government customers, in accordance with procedures governing adjustments to energy and water prices.

The companies said customers could review the revised rates on their official websites.

Improving consumption efficiency

The two new tariffs are designed to boost consumption efficiency for electricity and water while ensuring service sustainability.

Government support for the water sector will continue to cover capital expenditures, which account for more than half the cost of each cubic meter delivered to consumers.

According to the latest statistics, 99% of residential water customers have connections with diameters ranging from zero to 40. For customers consuming no more than 30 cubic meters, the increase in their bill will not exceed SAR 67, including value-added tax.

The electricity tariff changes are expected to have a limited impact on most industrial, commercial and agricultural activities. Water tariff adjustments will not apply to industrial or agricultural uses.

In agriculture, for example, a monthly electricity bill of SAR 5,000 ($1,333) could increase by SAR 300 to SAR 400. The impact could be reduced through more efficient electricity and irrigation water use and better scheduling of pump operations.

3 tracks

King Salman's directives encompass three tracks for citizens: an additional monthly stipend of SAR 500 for social security beneficiaries; a monthly increase of SAR500 for civil service and operational scale employees, to be added to their specified allowances; and a gradual adjustment of the minimum wage required to count a Saudi worker toward localization percentages under the "Nitaqat" program.

These measures aim to bolster the assistance provided to social security beneficiaries, increase the income of civil service and operational scale employees, and modify the mechanism for calculating Saudi workers within localization ratios under the "Nitaqat" program over two phases, thereby granting establishments sufficient time to prepare for implementation.

A fixed monthly support of SAR 500 has been allocated and added to the salaries of state employees, stemming from the government's steadfast commitment to ensuring they are shielded from any livelihood ramifications resulting from economic decisions to amend electricity and water tariffs.

This measure enhances the support provided to them and accounts for their living requirements, reflecting the state's continued backing of citizens and its mitigation of the impact of economic changes on them.

Supporting citizens and addressing their needs remains a constant priority, as the state continues to develop support programs and initiatives to ensure they reach eligible groups while considering the impact of economic changes and decisions on their livelihood.

Monthly support for citizens

For government employees, the increase will be added to a designated allowance rather than basic salaries, without affecting other allowances or financial benefits.

The measures are intended to ease the impact of higher utility costs on households and strengthen social protection.

Although the tariff revisions are expected to exert some upward pressure on inflation, the accompanying support measures are expected to help contain the impact and maintain stability in living costs.

Payments to social security beneficiaries will be based on existing records and coordination with relevant authorities to verify eligibility and prevent duplicate disbursements.

The mechanism is designed to minimize administrative requirements while ensuring assistance reaches eligible recipients.

Private sector

The package also includes a two-stage increase in the minimum wage required for a Saudi employee to count as one full worker toward a company’s Saudization quota under the Nitaqat program.

The threshold will rise to SAR 5,000 on April 25, 2027, six months after the decision, before increasing to SAR 6,000 on April 25, 2028.

The adjustment does not involve direct cash payments from the ministry to Saudi private sector employees. Instead, it changes the wage threshold used to calculate their contribution to companies’ Saudization requirements.

The phased implementation is intended to give private sector establishments sufficient time to prepare.

The tariff revisions and accompanying financial measures seek to balance more efficient resource consumption with continued support for citizens, while ensuring the sustainability of electricity and water services.

Business

Abdulaziz bin Salman: Saudi Arabia Continues to Supply Energy Markets Despite the Challenges

Saudi Minister of Energy, Industry, and Mineral Resources Prince Abdulaziz bin Salman. (Reuters file)
Saudi Minister of Energy, Industry, and Mineral Resources Prince Abdulaziz bin Salman. (Reuters file)
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Abdulaziz bin Salman: Saudi Arabia Continues to Supply Energy Markets Despite the Challenges

Saudi Minister of Energy, Industry, and Mineral Resources Prince Abdulaziz bin Salman. (Reuters file)
Saudi Minister of Energy, Industry, and Mineral Resources Prince Abdulaziz bin Salman. (Reuters file)

Saudi Minister of Energy, Industry, and Mineral Resources Prince Abdulaziz bin Salman stressed on Monday that the Kingdom has continued to supply global energy markets under difficult circumstances, which practically demonstrates the resilience of the Saudi energy system.

He pointed out that investments are continuing to maintain oil production capacity and expand into gas, renewable energy, and power grids.

In a video message during the ministerial keynote address at Singapore International Energy Week, Prince Abdulaziz stated that Saudi Arabia continues to invest in maintaining its oil production capacity alongside expanding into gas, renewable energy, and electrical grids to meet demand and enhance the energy system's capability to withstand disruptions.

The Kingdom has invested for decades in preparing to confront energy challenges by developing infrastructure, storage facilities, and local supply chains, in addition to building expertise and human capabilities in the energy sector, he added.

Prince Abdulaziz underlined the importance of the growing partnership between Saudi Arabia and Singapore, noting the available opportunity to transform shared priorities into practical cooperation in the energy field.

In this context, he said that cooperation regarding the Jurong Rock Caverns for oil storage could support Singapore's supply security and competitiveness while boosting the resilience of the Saudi supply network.

Singaporean Minister for Manpower and Second Minister for Trade and Industry Tan See Leng had previously announced the joint initiative between the two countries to establish an arrangement allowing the storage of Saudi crude oil in the Jurong Caverns, starting from the second half of 2027.

This initiative comes within the framework of strengthening cooperation between the two nations in the field of energy security, utilizing storage facilities and infrastructure to support the reliability and resilience of supplies.

Business

SABIC Returns to Profitability in Q3 as Revenues and Earnings Improved

The headquarters of Saudi Basic Industries Corp (SABIC) is seen in Riyadh, Saudi Arabia (File photo: Reuters) 
The headquarters of Saudi Basic Industries Corp (SABIC) is seen in Riyadh, Saudi Arabia (File photo: Reuters) 
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SABIC Returns to Profitability in Q3 as Revenues and Earnings Improved

The headquarters of Saudi Basic Industries Corp (SABIC) is seen in Riyadh, Saudi Arabia (File photo: Reuters) 
The headquarters of Saudi Basic Industries Corp (SABIC) is seen in Riyadh, Saudi Arabia (File photo: Reuters) 

The Saudi Basic Industries Corporation (SABIC) returned to profitability in the third quarter of 2026, reporting a net profit of $133 million (SAR 499 million), compared to $116 million (SAR 434 million) in the same period last year.

The improvement was driven by higher selling prices for its products and stronger results from investments in affiliates and joint ventures, despite ongoing geopolitical challenges and pressure on supply chains.

Financial results for the third quarter of 2026, showed that revenue increased 14% quarter on quarter to $7.51 billion (SAR 28.17 billion), up 13.5% compared to the second quarter, when revenue totaled $6.62 billion (SAR 24.81 billion).

However, it reported a 3.1% year-over-year revenue decline, from $7.75 billion (SAR 29.08 billion) in the third quarter of 2025.

Improved Adjusted EBITDA

SABIC highlighted an Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of $1.27 billion (SAR 4.75 billion), an increase of 40% Q-o-Q.

Meanwhile, the company registered an Adjusted EBIT (Earnings Before Interest and Taxes) of $579 million (SAR 2.17 billion), an increase of 434% Q-o-Q, in addition to an Adjusted Net Income of $222 million (SAR 840 million).

SABIC attributed the improvement in its Q3 results to a $153 million (SAR 575 million) increase in gross profit, in addition to a $432 million (SAR 1.62 billion) improvement in results from non-integrated joint ventures and associates mainly due to the reversal of impairment losses on listed equity investments in Europe following an increase in share prices.

These positive factors were partially offset by losses related to discontinued operations amounting to around $263 billion (SAR 985 million) in relation to the reclassification of foreign currency translation from equity to the income statement following the successful completion of the sale of SABIC's thermoplastics engineering businesses in North America, South America and Europe as part of the company's portfolio optimization program.

Also, net financial results declined by around $95 million (SAR 358 million,) mainly due to the fair-value valuation of derivative instruments recognized in equity in the corresponding quarter of the previous year, which are non-cash in nature.

9-Month Losses Narrow

The net loss for the nine months of 2026 narrowed to around $85 million (SAR 320 million), compared with a net loss of $1.29 billion (SAR 4.84 billion) for the corresponding period of 2025.

SABIC recorded a revenue of $21.10 billion (SAR 79.13 billion) for the first nine months of 2026, marking a 10.7% decrease compared to the $23.62 billion (SAR 88.57 billion) reported during the same period in 2025.

It also reported year-on-year declines in gross profit to $4.24 billion (SAR 15.91 billion), compared with $4.57 billion (SAR 17.12 billion) a year earlier.

Operating profit fell to $1.13 billion (SAR 4.22 billion), from $1.40 billion (SAR 5.25 billion).

SABIC said the narrower net loss was primarily attributable to an $819 million (SAR 3.07 billion) reduction in losses from discontinued operations, alongside a $648 million (SAR 2.43 billion) improvement in results from joint ventures and associates.

It then reported an increase of a $333 million (SAR 1.25 billion) in selling and distribution expenses during the first nine months of 2026 compared to the same period in the previous year, as well as a $323 million (SAR 1.21 billion) decline in gross profit, driven by lower sales volumes.

Focus on Operational Efficiency

SABIC reaffirmed its commitment to operational efficiency, portfolio optimization and selective growth, while maintaining the operational flexibility needed to navigate geopolitical and logistical challenges, according to its earnings statement.

“In Q3 2026, Sabic demonstrated exceptional resilience, despite geopolitical developments and market headwinds, coupled with a clear and robust forward-looking vision and continued focus on strategic objectives, namely portfolio optimization, transformation and selective growth, in efforts to support the company’s long-term profitability and value creation for shareholders, building on its historic journey of more than five decades,” said Sabic chief executive Faisal M Alfaqeer.

In terms of cash flow, net cash generated from operating activities after capital expenditure reached approximately $1.50 billion (SAR 5.61 billion) in the first nine months of the year, compared with around $1.05 billion (SAR 3.94 billion) in the same period in 2025.

The company cut its full-year capital expenditure guidance to between $3 billion and $3.3 billion from its previous estimate of $3.5 billion and $4 billion, according to its latest presentation.