KEC trims loss as sales improve

Saudi Arabia’s Knowledge Economic City narrowed its first-quarter net loss as higher revenue and stronger gross profit helped offset continuing finance and development costs at its flagship Madinah project.

The Tadawul-listed developer reported a net loss attributable to shareholders of SAR15.43 million for the three months ended March 31, compared with SAR17.26 million a year earlier, a reduction of 10.6 per cent. The loss was equivalent to about $4.11 million, based on the dollar peg. Revenue rose 8.7 per cent to SAR55.43 million from SAR51 million, while gross profit climbed 68.7 per cent to SAR16.5 million, signalling better margins from ongoing activity within the company’s real estate and development portfolio.

The quarterly numbers point to a gradual improvement in operating performance, although KEC remains loss-making as it continues to invest in infrastructure, residential, hospitality and mixed-use assets around Madinah. The company’s first-quarter loss per share stood at about SAR0.05, compared with the same figure a year earlier on a rounded basis, reflecting the still-limited scale of recurring earnings against its sizeable capital base.

KEC’s business is closely tied to Saudi Arabia’s broader push to expand religious tourism, urban development and private-sector investment under Vision 2030. The company is developing a large integrated destination in Madinah, positioned within the city’s urban growth corridor and close to key transport links including Prince Mohammad bin Abdulaziz International Airport and the Haramain high-speed rail station. Its projects are designed to serve residents, pilgrims, visitors and businesses seeking exposure to one of the Kingdom’s most important religious and commercial centres.

The latest performance also follows a year in which the company’s revenue more than doubled to SAR318.99 million in 2025 from SAR158.81 million in 2024, while its full-year net loss widened to SAR34.87 million from SAR20.96 million. That pattern underlines the central challenge facing KEC: sales and project activity are expanding, but profitability remains dependent on execution pace, cost control, financing terms and the timing of revenue recognition from large real estate developments.

KEC has been building momentum through a series of construction and financing steps. Earlier this year, it obtained SAR150 million in Sharia-compliant financing from Banque Saudi Fransi, supporting its infrastructure and project pipeline. It also signed a SAR32.5 million construction contract with Astra Construction Company for structural and embedded mechanical, electrical and plumbing works at the Riyadh Schools complex within Knowledge Economic City. Separately, the company awarded a SAR282 million contract to ElKhereiji Commerce and Contracting Company for additional residential blocks in the first phase of the Al-Alya project.

The Al-Alya development is one of the main assets in KEC’s residential pipeline and is intended to support demand for housing in Madinah as the city expands its hospitality, education and lifestyle infrastructure. The company has also sought to deepen its hospitality offering through partnerships, including hotel-related ventures and international brand agreements linked to growing visitor flows.

Saudi Arabia’s tourism strategy is central to the investment case. The Kingdom has been expanding capacity for pilgrims and visitors while seeking to attract more international travellers, private investment and entertainment spending. Madinah, as one of Islam’s two holiest cities, is a core beneficiary of that policy shift, with demand for accommodation, transport, retail and community services expected to remain structurally strong over the long term.