ADES Holding Profit Falls 23% to $122.6M as Revenue Jumps 44%

ADES Holding booked a 23% decline in net profit attributable to shareholders for the first nine months of 2026, at $122.6 million (SAR 459.8 million), even as revenue climbed 44% to $1.8 billion (SAR 6.8 billion). The Saudi-listed drilling contractor disclosed the figures in a filing on the Saudi Exchange released Monday.

The gap between top line and bottom line widened in the third quarter. Revenue for the three months to Sept. 30 reached $594.4 million (SAR 2.2 billion), up 34.8% year over year and 3.5% on the previous quarter. Net profit attributable to shareholders fell 55.8% year over year and 26.2% quarter over quarter to $25.3 million (SAR 94.9 million).

Earnings before interest, tax, depreciation and amortisation for the nine months rose 25.1% to $845.8 million (SAR 3.2 billion). The EBITDA margin, however, came in at 46.8%, against 53.9% a year earlier. Third-quarter EBITDA of $268.8 million (SAR 1 billion) was 17.1% higher year over year, on a margin of 45.2% versus 52%.

Gross profit for the nine months increased 29.2% to $616.3 million (SAR 2.3 billion), and operating profit rose 17.9% to $459.6 million (SAR 1.7 billion).

Three factors pulled profit down: the lower-margin profile of the Shelf Drilling operations, rigs taken out of service temporarily, and one-off insurance costs.

Cash generation held up. Cash flow from operating activities before working capital changes reached $778.2 million (SAR 2.9 billion), 19.1% above the $653.7 million (SAR 2.5 billion) of a year earlier. Capital expenditure jumped 67.9% to $624.9 million (SAR 2.3 billion), a mix of acquisition-related outlays and routine maintenance.

Net debt stood at $5.2 billion (SAR 19.7 billion) on Sept. 30, 10.5% above the $4.7 billion (SAR 17.8 billion) recorded at the end of 2025. The increase stems mainly from the Saipem purchase.

Offshore carries the group

Offshore work generated $1.5 billion (SAR 5.8 billion) in the nine months, up 51.2%, and accounted for roughly 85% of group revenue. Onshore revenue rose 13.5% to $271 million (SAR 1 billion), helped by better rig utilisation in Kuwait.

International operations supplied 53.1% of group revenue; markets in the Gulf Cooperation Council supplied 46.9%. Inside the Gulf, Saudi Arabia brought in $638.8 million (SAR 2.4 billion), 13.1% less than a year earlier, and Qatar contributed $51 million (SAR 191.3 million), down 22.1%. The company linked the regional softness to rigs idled temporarily and operational transitions.

Growth came from further afield. Revenue in India rose 139.6%, in Southeast Asia 73.1% and in Egypt 51.9%, driven by more operating rigs, the Shelf Drilling acquisition and higher brownfield contributions in Egypt.

Fleet and backlog

ADES closed its roughly $285 million purchase of Saipem's shallow-water drilling business in September, subject to customary closing adjustments. The deal brought five premium jackup rigs, three owned and two leased, plus about $986.7 million (SAR 3.7 billion) of contracted backlog at completion. Four of the rigs work in Saudi Arabia; the fifth is in Mexico.

The acquisition lifted the group to 21 countries. The fleet now numbers 128 rigs, 88 offshore and 40 onshore, with 110 units operating against 77 a year earlier.

Contracted backlog reached $10.1 billion (SAR 37.7 billion) at the end of September, from $9.3 billion (SAR 34.7 billion) at end-2025. Weighted average remaining contract term was 4.39 years, and effective rig utilisation was 98%, just below the 98.3% of a year earlier.

New awards kept arriving. ADES won a two-year Nigeria drilling contract worth about $100.1 million (SAR 375.3 million), including mobilisation, demobilisation and a local partner share, plus a UK North Sea contract with a potential value of $128.8 million (SAR 483 million) once optional extensions and associated fees are counted. After the period closed, it announced an Indonesia contract carrying $46.2 million (SAR 173.1 million) of backlog and two three-year India contracts with a combined $117.2 million (SAR 439.6 million).

The company ranked 74th on the 100 Most Valuable Companies 2026 list.

Management held full-year 2026 EBITDA guidance at $1.2 billion to $1.3 billion (SAR 4.5 billion to SAR 4.87 billion) and expects the Nigeria, Indonesia and India contracts to begin contributing between late 2026 and the first quarter of 2027. Integration of the Shelf Drilling and Saipem assets continues.

More of ADES's growth is now bought than drilled. The Saipem deal alone added five rigs and close to $1 billion of backlog, and net debt moved up in step. With 98% of the fleet already contracted and an average of 4.39 years left to run, the variable that decides earnings is less about utilisation than about the margin each contract carries, which is the same line that pulled profit lower this period.