Middle East Paper Company (MEPCO), the Middle East’s leading vertically integrated paper manufacturer, has announced its financial results for the second quarter (Q2) and first half (H1) ended June 30, 2026.

• Q2 Total Revenue: SAR 298.0 million, up 8% year-on-year (YoY).
• Gross Profit: SAR 56.5 million, up 53% YoY, with Gross Margin expanding 550 basis points to 19.0%.
• Operating Profit: SAR 20.4 million, up 70% YoY.
• Net Income attributable to equity holders: SAR 15.3 million, up 193% YoY.
• Working Capital Efficiency: Inventory levels decreased by more than 30% during H1 2026, positively contributing to the Cash Conversion Cycle.
• Strategic Growth Projects: PM5 and Juthor’s Tissue Machine 6 (TM6) remain on track to commence soft operations by late 2027.

MEPCO delivered a strong operational performance in Q2 2026, supported by a 17% increase in sales of containerboard and industrial papers. Despite mixed regional market conditions and higher global freight expenses, the company optimized its product mix and prioritized local markets in Saudi Arabia and key Asian markets where higher freight costs had less impact on pricing competitiveness.

Revenue increased 8% YoY to SAR 298.0 million, while cost of revenue increased by only 1% to SAR 241.5 million. This helped lift gross profit by 53% to SAR 56.5 million and gross margin to 19.0%, compared with 13.5% in Q2 2025.

Cost optimization also supported profitability, with selling and distribution expenses declining 23% YoY. Operating profit increased 70% to SAR 20.4 million. Lower finance costs and a significant reduction in zakat expense also contributed to the increase in net income attributable to equity holders, which reached SAR 15.3 million.

For H1 2026, MEPCO reported revenue of SAR 542.3 million, up 2% YoY. Gross profit increased 17% to SAR 83.1 million, while operating profit remained broadly stable at SAR 25.1 million. Net profit attributable to equity holders increased 26% to SAR 13.3 million.

Q2 & H1 2026 Financial Highlights

Strategic Expansion: PM5 and Juthor’s TM6

MEPCO continues to advance two major capacity expansion projects: the PM5 containerboard project and Tissue Machine 6 (TM6) at its wholly owned subsidiary, Juthor Paper Manufacturing Co.

Construction and machinery installation for the TM6 at Juthor’s facility in King Abdullah Economic City (KAEC) are progressing as planned. TM6 represents a SAR 345 million investment and will add 60,000 tonnes/year of tissue capacity to Juthor, doubling its capacity to 120,000 tonnes/year. The new line, supplied by ANDRITZ, is designed to operate at 2,100 m/min.

Both PM5 and TM6 remain on track to commence soft operations by late 2027.

The projects are part of MEPCO’s strategic investment programme to expand production capacity, strengthen operational resilience and position the company to capture future market opportunities.

Musab Sulaiman Al-Muhaidib, Chairman of the Board of Directors of MEPCO, commented: “The first half of 2026 demonstrated the resilience of our business and the strength of our strategic direction. Against a dynamic market backdrop, MEPCO delivered growth in revenue and profitability, supported by stronger sales, an improved product mix, disciplined cost management, and continued focus on operational efficiency. We remain firmly on track with our two flagship projects, PM5 and TM6, which will expand production capabilities, strengthen operational resilience, and position the Company to capture future market opportunities.”

Faisal Haddawi, Chief Executive Officer of MEPCO, commented: “The second quarter of 2026 marked a positive improvement in the Company’s performance, supported by stronger sales and continued focus on operational efficiency. The results were good enough to offset the drawback from Q1 2026. Revenue increased by 8% year-on-year to SAR 298.0 million in Q2, contributing to H1 revenue growth of 2% to SAR 542.3 million.”

He added: “We continued to make meaningful progress in our strategic investment program, with the PM5 and TM6 projects remaining on track to commence soft operations by late 2027. The Company invested SAR 238.9 million in capital work-in-progress during the period, reflecting our continued commitment to expanding capacity, enhancing operational resilience, and strengthening our product offering.”

Balance Sheet & Financial Position

At the end of H1 2026, MEPCO’s total assets reached SAR 2.8 billion, an increase of 5% compared with December 31, 2025. Property, plant and equipment increased 14% to SAR 1.6 billion, reflecting continued investment in the company’s strategic growth projects.

MEPCO invested SAR 238.9 million in capital work-in-progress during H1 2026.

Total debt stood at SAR 837.3 million, while cash and short-term deposits amounted to SAR 454.8 million, resulting in net debt of SAR 382.5 million. The debt-to-equity ratio stood at 0.51x, while net debt-to-equity was 0.23x.

Middle East Paper Company (MEPCO)

MEPCO is a vertically integrated paper manufacturer in the Middle East, offering containerboard and specialty paper products for the packaging, construction, furniture and paper core industries. The company has a growing global footprint spanning more than 40 countries.

Through its wholly owned recycling subsidiary, WASCO, MEPCO sources raw materials from across the Kingdom and neighboring countries, supporting resource efficiency and Saudi Arabia’s Vision 2030 sustainability objectives.