ADES profit drops 23% to $122.6M as revenue jumps 44%

Summary

• ADES Holding posted $122.6 million in nine-month net profit, down 23% year-on-year.
• Revenue rose 44% to $1.8 billion, lifted by the Shelf Drilling and Saipem acquisitions.
• Lower-margin acquired operations and rig suspensions are compressing margins even as the company scales fast.

The latest

Net profit attributable to ADES Holding shareholders fell 23% year-on-year to $122.6 million in the first nine months of 2026, even as revenue surged 44% to $1.8 billion, according to a Saudi Exchange filing released Monday. The Saudi-listed drilling services provider attributed the squeeze to lower-margin operations acquired through Shelf Drilling, temporary rig suspensions and one-off insurance expenses.

Details

• The margin story: EBITDA rose 25.1% to $845.8 million, but the EBITDA margin narrowed to 46.8% from 53.9%. Gross profit climbed 29.2% to $616.3 million and operating profit rose 17.9% to $459.6 million — all growing slower than the 44% revenue line, the arithmetic behind the profit drop.
• The third quarter: Quarterly revenue rose 34.8% year-on-year and 3.5% sequentially to $594.4 million, but net profit attributable to shareholders plunged 55.8% year-on-year and 26.2% quarter-on-quarter to $25.3 million. Quarterly EBITDA gained 17.1% to $268.8 million as the margin slipped to 45.2% from 52%.
• Debt and spending: Net debt rose 10.5% to $5.2 billion as of September 30, from $4.7 billion at the end of 2025, which the company linked primarily to the Saipem acquisition. Capital expenditure surged 67.9% to $624.9 million on acquisition-related spending and recurring maintenance.
• Cash generation: Cash flow from operating activities before working capital changes rose 19.1% to $778.2 million for the nine months, against $653.7 million a year earlier — the operating engine still expanding while reported profit contracts.
• The Saipem deal: ADES completed its roughly $285 million purchase of Saipem's shallow-water drilling business in September, subject to customary closing adjustments. The deal added five premium jackup rigs — three owned, two leased — and about $986.7 million in contracted backlog. Four operate in Saudi Arabia and the fifth in Mexico.
• Fleet size: The acquisition took ADES into 21 countries, with the total fleet reaching 128 rigs, 88 offshore and 40 onshore. The operating fleet rose to 110 rigs from 77 a year earlier, while effective rig utilization held at 98%, barely below 98.3%.
• Where growth came from: Offshore revenue rose 51.2% to $1.5 billion, roughly 85% of group revenue, while onshore revenue gained 13.5% to $271 million on higher rig utilization in Kuwait. India revenue surged 139.6%, Southeast Asia 73.1% and Egypt 51.9%.
• Where it shrank: Saudi revenue fell 13.1% to $638.8 million and Qatar revenue dropped 22.1% to $51 million, which the company tied to temporary rig suspensions and operational transitions. International markets now make up 53.1% of group revenue against 46.9% for the GCC.
• The backlog: Contracted backlog reached $10.1 billion as of September 30, up from $9.3 billion at the end of 2025, with a weighted average remaining term of 4.39 years.
• New contracts: ADES secured a two-year Nigerian drilling contract worth about $100.1 million and a UK North Sea contract with a potential value of $128.8 million including options. After the reporting period it announced an Indonesian contract worth $46.2 million and two three-year Indian contracts totaling $117.2 million.

Background

ADES has been buying scale rather than building it, absorbing Shelf Drilling and then Saipem's shallow-water unit. Each deal brings rigs, contracts and backlog — and operations earning thinner margins than the company's legacy Gulf business.

Between the lines

The pressure is concentrated in the home market: Saudi revenue fell 13.1% and Qatar 22.1%, while India, Southeast Asia and Egypt posted double- and triple-digit gains. With international markets now at 53.1% of revenue, ADES is becoming a global contractor whose reported earnings are temporarily absorbing the cost of that shift — $5.2 billion in net debt and a 7-point margin contraction are the price tag.

What's next

Watch whether suspended rigs in Saudi Arabia and Qatar return to service, how quickly Saipem's five jackups convert $986.7 million in acquired backlog into margin, and the full-year results that will show if Q3's 55.8% profit drop was a trough.

Source: Saudi Exchange filing