Q2 2026 National Gas Co SAOG Earnings Call

August 26, 2026

Speaker #1: This meeting is being recorded.

Speaker #2: Test, test. Do you hear me very well?

Speaker #3: Yes.

Speaker #2: Okay.

Speaker #3: السلام عليكم ورحمة الله وبركاته. نرحب بكم في الحلقة النقاشية الخاصة بشركة الغاز الوطنية لاستعراض البيانات المالية المنتهية في نصف السنة في 30/06/2026، والتي سوف يستعرضها عليكم الرئيس التنفيذي للشركة، الدكتور رشيد مجاد. فليتفضل مشكورًا.

Rachid Majjad: Good morning, everybody, and good afternoon for some of you. I think we are on time, 11:01. We have good people. I think we can start if some people will join after. I am very happy to open this session for H1 2026 with all of you. I will go through a short presentation, and afterwards, I will take your question with my team to answer to all your question in full details as much we can. First of all, as introduction and to give you an update about the market in Oman. The next slide, please. What happened and what is going on, and perhaps also you have heard, next also. We will come back to this one after. Where we are today and what happened on the market.

Speaker #3: تفضل دكتور.

Speaker #2: السلام عليكم ورحمة الله. Good evening, everybody. Good morning, everybody, and good afternoon to some of you. I think we are on time—11:01.

Speaker #2: We have good people. I think we can start, and some people may join after. I'm very happy to open this session for H126 with all of you.

Speaker #2: I will go through a short presentation, and afterwards I will take your questions with my team, to answer all your questions in full detail as much as we can.

Speaker #2: First of all, as an introduction and to give you an update about the market in Oman, next slide, please. What happened and what's going on, and perhaps you have also heard the next updates as well.

Speaker #2: We'll come back to this one after. Where we are today and what's happened in the market—perhaps you have also heard some noise, and we will take your remarks on it.

Rachid Majjad: Perhaps you have also heard some noises, and we will take your remark on it. Our price revision requests have been done again only in July, beginning of July, to the new undersecretary of commerce because we have a new minister, a new undersecretary since 6 months now. We are restarting the discussion, connection, update, challenge, and so on the ground. We met them with 2 members of our board member to convey them the message that really today, the price revision in Oman in such condition and also in this war condition.

Speaker #2: Our price revision requests have been done again only in July, at the beginning of July, to the new Undersecretary of Commerce, because we have a new minister and a new undersecretary since six months now.

Speaker #2: We are restarting the discussion, connection, update, challenge, and so on the ground, and we met them with two members of our board, to convey to them the message that really today, the price revision in Oman, in such conditions, and also in this war condition—even though we are not directly impacted, as you know, because we are subsidized—we are indirectly impacted.

Rachid Majjad: Even we are not directly impacted, as you know, because we are subsidized but indirectly impacted. Our price remained the same since 1994, OMR 1.9 per cylinder, 22 kg standard in Oman. For branding, we are also waiting clarification now since 2 years from Ministry of Commerce, Industry and Investment Promotion because branding has an impact in our cost. It will probably clean the market, but it has a cost. We have evaluated the cost as a management, and we have submitted a request to Ministry of Commerce, Industry and Investment Promotion to support all company, all player, and to see how we can support this branding, which is mainly one phase is to change the color.

Speaker #2: Our price has remained the same since 1994: 1.9 OMR per cylinder, 22 kg standard in Oman. For branding, we are also waiting for clarification—now for two years—from the Minister of Commerce, because branding has an impact on our cost.

Speaker #2: It will probably clean the market, but it has a cost. We have evaluated the cost as management, and we have submitted a request to MOCI to support all companies, all players, and to see how we can support this branding, which is mainly one phase: to change the color.

Rachid Majjad: It will probably clean the market, but it has a cost. We have evaluated the cost as a management, and we have submitted a request to Ministry of Commerce, Industry and Investment Promotion to support all company, all player, and to see how we can support this branding, which is mainly one phase is to change the color.

Speaker #2: Each player, each company, will have his color. Our color will be yellow. Our brand will be Mira, as in Malaysia. And normally, we also need to be safer—to change the valve to go to the international standard, which is a self-closing valve.

Rachid Majjad: Each player, each company will have his color. Our color will be yellow. Our brand will be Mira, as in Malaysia. Normally, we need also to be more safe to change the valve to go to the international standard, which is self-closing valve. All this has a cost. This cost has evaluated, but we are still waiting the feedback from Ministry of Commerce, Industry and Investment Promotion, what to do, what to implement, and who will pay for it. Is it the final customer or with this indirect subsidy from the government for a transition period?

Speaker #2: All this has a cost. This cost has been evaluated, but we are still waiting for feedback from MOCI—what to do, what to implement, and who will pay for it.

Speaker #2: Is it the final customer, or is this an indirect subsidy from the government for a transition period? Margins remain under pressure in the current environment, mainly in bulk.

Rachid Majjad: Margin remain under pressure in the current environment, mainly in bulk, we can say, because we have too much player for a very small volume in Oman. Again, I think since 1994, which is really long time now, we cannot count anymore, and our purchase price has increased, as you know, by 50%. A lot of taxes. Now a new law came for 1%, for sick leave, et cetera. Many participants, small market, as I told you, for the price. It is mainly the challenge for. We have taken some rules and some action on the bulk. We will come back to it. Project execution has been slower than planned because a lot of material delivery are coming from abroad and transport cost has increased, and even not only the transport, but the timing.

Speaker #2: We can say, because we have too many players for a very small volume in Oman. And again, I think since 1994—which is really a long time now—we cannot count anymore, and our purchase price has increased, as you know, by 50%.

Speaker #2: A lot of taxes, now a new law came for 1% for sick leave, etc., etc. Many participants, small market, as I told you, for the price it's mainly the it's mainly the challenge for but we have taken some rules and some action on the bulk.

Speaker #2: We will come back to it. And project execution has been slower than planned because a lot of material deliveries are coming from abroad, and transport costs have increased. And it's not only the transport costs, but also the timing.

Speaker #2: The good news, and I think it's important, is that we started this journey three years ago to transform the company. Despite the above challenges and the discontinuation of discounting—which mainly involves removing the discount we have been providing to traders and our distributors for 20 years—there is progress.

Rachid Majjad: The good news, I think it is important, we have started this journey 3 years ago to transform the company, is despite the above challenge, the discontinuation of discounting, which is mainly removing the discount we have done for the trader, for our distributor for 20 years. We removed it because we can no more afford. Cost control has helped achieving a very positive operating profit, which is the good step for this H1. Probably we will continue in the same trend for H2 if no major change from the government side. Next, please. From cylinder and bulk, as we say, in H1 for Oman 2026, the sales volume jumped by 5%, price realization, which is margin, 5% also versus last year H1.

Speaker #2: We removed it because we can no longer afford it, and cost control has helped achieve very positive operating profits, which is a good step for this H1.

Speaker #2: And probably, we will continue in the same trend for H2 if there is no major change from the government side. Next, please. For cylinder and bulk, as we said in H1 for Oman 26, the sales volume jumped by 5%, and price realization—which is margin—was up 5% also, versus last year H1.

Speaker #2: And bulk volume—we reduced it because I think a lot of customers were taking a lot of volume at very low margin, eroding our margin and increasing our cost.

Rachid Majjad: Bulk volume we reduced it because I think a lot of customer was taking a lot of volume at very low margin, erosion our margin, increasing our cost. We have decided to stop them because the profit was close to zero, we were very selective to protect our margin. On the other side, for lubricant and product lubricant, we are impacted, nevertheless, directly from UAE, because our products are coming through UAE. Due the war, the base oil is no more available, price has increased. Due to the stock we got and some new supplier, we have achieved some compensation. Nevertheless, we are still challenging for 2026. Lubricant will be a little bit challenged for us. Products revenue is higher, slightly by OMR 45K, but even some delayed in material. Overall price realization, we have improved by 2.38. Come back, please.

Speaker #2: We have decided to stop them because the profit was close to zero, and we have been very selective to protect our margin.

Speaker #2: On the other side, for lubricant and project, lubricant we are impacted nevertheless directly from UAE because our products are coming through UAE and do the war the base oil is no more valid available and price has increased but due to the stock we got and some new supplier we have achieve some compensation but nevertheless we are still challenging for 26 lubricant will be a little bit challenge for us.

Speaker #2: Project revenue is slightly higher by $45,000, even with some delays in material. Overall, price realization has improved by 2.38—come back, please—by 2.8 rial per metric ton versus last year, which has helped a lot to achieve these good results.

Rachid Majjad: By 2.8 rial per metric ton versus last year, which has helped a lot to achieve these good results. Next. In efficiency and in operation optimization, the LPG volume managed. We have selected volume and priced to protect margin, which have the GP. The gross profit has improved by roughly OMR 100,000, which is, for us, significant, even the amount is small. Administrative and selling, general and other expense, we control to the level of last year, 2025. Even we have increased in the payroll many of the people who are working very hard in the company to transform this company, also mandatory, you know, the 3% from Ministry of Labour. Even all these apply, we have exactly at the same level of last year. We have not absorbed any increase. We have absorbed all the increase. Profit before tax turned positive against a loss on H1 last 2025.

Speaker #2: Next, in efficiency and in operation optimization, the LPG volume management, we have selected volume and price to protect margin, which means the GP, the gross profit, has improved by roughly 100,000 Riyal, which is for us significant, even if the amount is small.

Speaker #2: Administrative and selling expenses, we controlled to the level of last year, 25, even though we have an increase in payroll, as many of the people are working very hard in the company to transform this company. And also, mandatory, you know, the 3% from MOL.

Speaker #2: Even with all these factors, we are exactly at the same level as last year; we have not passed on any increase. We have absorbed all the increase.

Speaker #2: Profit before tax turned positive against the loss in H1 last year. Next, please. In the finance part, working capital—our DSO has improved. If we compare only December to June, it is one day. But I think our target is to go to 70 by the end of the year. We were trying to achieve it, but even today, the atmosphere in the market—the payment is more and more challenging for the SMEs in Oman.

Rachid Majjad: Next, please. In the finance part, working capital, our DSO has been improved. If we compare only December to June, it will be one day. I think our target is to go to 70 by end of the year. We are trying to achieve it. Even today, the atmosphere on the market, the payment is more and more challenging for the SMEs in Oman. Working capital has been really improved by 10 days, which today we are at 41 days. It is a shorter cycle. Recovery of due, I think we have negotiated and managed a recovery of 224, which was dragging since more than 18 month with Strategic & Precious Metals Processing, OA company. Finally, we settled the due and it helped us by June 2026, then we have reduced our ECL by OMR 85,000 in H2.

Speaker #2: Working capital has really improved by 10 days; today we are at 41 days, which is a shorter cycle. Regarding recovery of dues, I think we have negotiated and managed a recovery of OMR 224,000, which had been dragging for more than 18 months with SPMP. Yeah, the company—finally we settled the due, and it helped us by June 26. We have also reduced our ECL by OMR 85,000 in H2.

Speaker #2: 264 Omani Riyal or 26%—we got appreciation of our investment share held by NGC. It's the share we hold in MA6 since a long time. I think it helps also with this appreciation for this H1.

Rachid Majjad: 264 Omani rial, or 26%, we got appreciation of our investment share held by NGC. It is the share we are held in at MASIC since long time. I think it helps also with this appreciation for this H1. Next, please. I think the trend, this is a little bit to give you. As you remember, 2022, 2023, 2024 was we are going from -0.5 million to 200 to break even in 2024. 2025, we was positive. I am speaking about years here. The last block 32, it is only six month. I think we will be close to 2025 or probably much better if everything stays smooth for the second half. Even we get some challenge. We are in the good trend. The transformation now is seen in the numbers. Now, we need to be transparent also. We are fragile also because the numbers are slightly OMR 100,000 profit.

Speaker #2: Next, please. I think the trend here is a little bit—just to give you, as you remember—in '22, '23, '24, we are going from minus half a million to 200 to break even in '24.

Speaker #2: 2025 was positive—I'm speaking about years here. The last block, 2023, it's only 6 months. I think we will be close to 2025, or probably much better, if everything stays smooth for the second half, even if we get some challenges.

Speaker #2: We are in a good trend. The transformation—now, we see in the numbers. Now, we need to be transparent. Also, we are fragile because the numbers are slightly—100,000 real profit. A small change in the environment or in the law tomorrow can make some challenge. But positively, we are in a good trend today.

Rachid Majjad: A small change in the environment or in the low tomorrow can make some challenge. Positively, we are in a good trend today. Next, please. I finish for Oman. I want to open a little bit also to share with you the good news about our Saudi. As you know, we are in expansion in Saudi, mainly, and UAE. Let us talk about Saudi, which is tangible today. We won against 11 to 15 company, the bidder for Saudi. We are now officially awarded two license secured. License 2 for LPG refill and storage for Jeddah and Jizan. License 3 is LPG distribution across the entire kingdom. This is what we are doing today in Oman as a bulk. The first one is what we are doing in six plant today.

Speaker #2: Next, please. I have finished with Oman. I want to open up a little bit to also share with you the good news about our operations in Saudi. As you know, we are expanding mainly in Saudi and the UAE, but let's talk about Saudi, which is tangible today.

Speaker #2: We won against 11 to 15 companies. The bidder for Saudi—we are now officially awarded two licenses: secured licenses for LPG refill and storage for Jeddah and Gizan.

Speaker #2: License three it's LPG distribution across the entire kingdom which is what we are doing today in Oman as a bulk and the first one is is what we are doing in six plan today but the scale up it's 10 time bigger and we are more close to our business what we are doing in in Malaysia than in Oman size wise.

Rachid Majjad: The scale-up, it is 10 times bigger, and we are more close to our business, what we are doing in Malaysia than in Oman, size-wise. New entity being established with our JV term now being finalized with our partner. We have a very strong local Saudi partner, the Zamil Group, who has 46 company, and he has decided to join us with his adventure, in a secure business for him because it is a necessity for the country. The size of the volume in Saudi is 1.3 million, with one player only today, which is Gasco. That Gasco, over the last two years, has restructured the company in a very different company. Next, please. The different Gasco has structured himself like this one in four company. License 1, license 2, license 3, license 4. Gasco now has four company. JAL, Tazweed, Tazeen, and Ulul.

Speaker #2: A new entity has been established, with our JV terms now being finalized with our partner. We have a very strong local Saudi partner, the Zamil Group, who has 46 companies, and he has decided to join us in this venture. It is a secure business for him because it's a necessity for the country. The size of the volume in Saudi is 1.3 million, with only one player today, which is Gasco. Gasco, over the last two years, has restructured the company into a very different company.

Speaker #2: Next, please. Gasco has now structured itself like this, with four company licenses: License One, License Two, License Three, and License Four. Gasco now has four companies: Jal, Tezuit, Takhzeen, and Hulul.

Speaker #2: The license one, it's only a logistic company, supplying from Aramco to all refill plants in the Kingdom. License two, you are allowed to have storage, which is safety, security, big investment—and to fill cylinders and to sell bulk to anybody who has license three.

Rachid Majjad: License 1, it is only a logistic company, supply from Aramco to all refill plant in the kingdom. License 2, you are allowed to have storage, which is safety, security, big investment, and to fill cylinder and to sell bulk to anybody who has license 3. License 3 is mainly distribution. You cannot have storage. You have mainly truck. You are a distribution company of bulk company to SMEs, to industrial, and also to commercial customer. License 4, which is today not practically existing, but in building. It is what we call distributor, but it is mainly a wholesaler of cylinder, is someone who has the capacity to have 100, 200,000 cylinder to be a stockist, to store and so. After him, there will be small distributor locally by region. For us, we got license 2 and license 3. License 3 is national. License 2 is regional.

Speaker #2: License three is mainly for distribution. You cannot have storage. You mainly have trucks. You are a distribution company—of bulk—to SMEs, to industrial, and also to commercial customers.

Speaker #2: License four, which today is not practically existing but is in building. It's what we call a distributor, but it's mainly a wholesaler of cylinders. It's someone who has the capacity to have 100,000 to 200,000 cylinders, to be a stockist, to store, and so on. Then after him, there will be small distributors locally by region.

Speaker #2: For us, we got License Two and License Three. License Three is national. License Two is regional: Jeddah one, Riyadh one, and the MAM one mainly. Today, tomorrow, in two years from now, License Two needs roughly two years to build the plan to execute.

Rachid Majjad: Jeddah, one, Riyadh, one, and Dammam, one. Mainly today, tomorrow, in two years from now, license 2 need roughly two years to build the plant to execute. License 1 can be shorter in one year maximum execution. We will be, at that time, three player, National Gas and Industrialization Company, Unigaz from Lebanon, plus NGC with his partner, Zamil. Next, please. This is the three license, as I told you. We have bid for this license in May 2023. Today, we are 26 August. It has taken time. I think mainly time has been taken to give National Gas and Industrialization Company the capacity to restructure and to clean and to start the competition in a fair and cleaner way. License 1 also now has been opened for bidding officially by Ministry of Energy and Minerals in Saudi, and they called us to participate. License 4, they called us also for an official RFP floated by Ministry of Energy and Minerals also.

Speaker #2: License one can be shorter, with a maximum execution period of one year. At that time, there will be three players: Gasco, Unigas from Lebanon, plus NGC with its partner Zamil.

Speaker #2: Next, please. These are the three licenses. As I told you, we bid for these licenses in May 23. Today, we are August 26.

Speaker #2: It has taken time. I think mainly, time has been taken to give Gasco the capacity to restructure, to clean, and to start the competition in a fair and cleaner way.

Rachid Majjad: It has taken time. I think mainly time has been taken to give National Gas and Industrialization Company the capacity to restructure and to clean and to start the competition in a fair and cleaner way. License 1 also now has been opened for bidding officially by Ministry of Energy and Minerals in Saudi, and they called us to participate. License 4, they called us also for an official RFP floated by Ministry of Energy and Minerals also.

Speaker #2: License one also now has been opened for bidding officially by OMOE in Saudi and they called us to participate and license four they called us also for an official RFP loaded floated by MOE also and we are evaluating shall we participate or no as you know all these license it's long strategy it's a license for 25 years and the investment it's a huge amount it's not a small amount then I think we will see with the board if we shell or not go for license one and license four today we are starting to execute and to be ready for license two and license three this is a little bit to inform you what's happened for Saudi probably by we have met the ministry we are now starting officially 1st of September 26 the process to get the license and to build the plant and to penetrate the market to set up the company to hire the people etc and financing also we are also working on how to finance these two big projects.

Rachid Majjad: We are evaluating, shall we participate or no? As you know, all these license, it is a long strategy. It is a license for 25 years, and the investment, it is a huge amount. It is not a small amount. I think we will see with the board if we shall or not go for license 1 and license 4. Today, we are starting to execute and to be ready for license 2 and license 3. This is a little bit to inform you what happened for Saudi. Probably we have met the ministry. We are now starting officially 1 September 2026, the process to get the license and to build the plant and to penetrate the market, to set up the company, to hire the people, et cetera, and financing also. We are also working on how to finance these two big projects. Next, please.

Speaker #2: Next, please. This is a quick map for the zone. We got the zone from Yambu on the north Jordan border to Yemen, Gizan, and the two yellow new plants. These are the two new plants we are building. Two new plants will be built also in Riyadh, and one will be in—then the government is asking the new investors, the two new investors, to build five new, big filling plants to support the country for its growth.

Rachid Majjad: This is a quick map for the zone we got. The zone got from Yanbu on the northern Jordan border to Yemen, Jizan, and the two yellow new plant. This is the two new plant we are building. Two new plant will be built also in Riyadh and Kharj, and one will be in Al Ahsa. The government is asking the new investor, the two new investor, to build five new filling big plant to support the country for its growth. Next. To finish with the numbers of financial results we have published, I think some of you have screened them. The revenue for the parent company, we are slightly below at OMR 5.3 billion -3.6, mainly is coming from the fact that we have reduced a bulk customer which was not affordable.

Speaker #2: Next, to finish with the numbers, the financial results we have published—I think some of you have seen them. The revenue for the parent company is slightly below, at 5.3 million Omani rial. The minus 3.6 million mainly comes from the fact that we have reduced bulk customers, which was not affordable.

Speaker #2: The good sign is that our gross profit margin has improved even though we have reduced the revenue, and the main point for us—which we want to share with you—is the operating profit, which is the capacity of a company to generate profit. It's positive today after this transformation plan. We are at 32,000 positive versus last year, minus 63,000 Omani Rial.

Rachid Majjad: The good sign is that our margin gross profit has improved, even we have reduced the revenue. The main point for us, we want to share with you the operating profit, which is the capacity of the company generating profit. It is positive today. After this transformation plan, we are at +32 versus last year, -63,000 OMR. Bottom line, because we have this ECL, we have these shares and so on, we are at PBT, 114,000 versus a loss of 30,000 last year, and net 100,000 positive in Oman, which gives us a good hope to continue this action. At a group level, revenue, as you know, it is also impacted by the CP. CP is not under our control, is Saudi Aramco control. CP was slightly high in June due to the war. It explained this 8.8.

Speaker #2: Bottom line, because we have this ECL, we have these shares, and so on, we are at profit before tax (PBT) of 114,000 versus a loss of 30,000 last year, and net-net, 100,000 positive in Oman, which gives us good hope to continue the same trend.

Speaker #2: At a group level revenue as you know it's also impacted by the CPCP is not under our control is the Aramco control CP was slightly high in June because due to the war and so it explained this 8.8 but also we have grow by volume CP explain partially but volume explain also and at a group level also last year our operating profit was negative minus 127 today we converted at 700 50,000 we got also we are maintaining our core business in Malaysia we have reduced the loss of Saudi the the engineering company we still have over there and PBT it's now 471 versus 300 last year loss and at bottom line profit for us it's really 300,000 positive compared to 350,000 negative last year.

Rachid Majjad: But also we have a grow by volume. CP explained partially, but volume explained also. At the group level also, last year, our operating profit was -127. Today, we converted at 750,000. We are maintaining our core business in Malaysia. We have reduced the loss of Saudi, the engineering company we still have over there. PBT, it is now 471 versus 300 last year loss. At bottom line profit for us, it is really 300,000 positive compared to 350,000 negative last year. It is a good H1. I think both at the group size now, everything is under control. Everything is also well-managed, and we hope that we can maintain our stability regarding the margin and in the two main activity in Malaysia and Oman. Next. I only to share with you some product we have before closing my presentation.

Rachid Majjad: Also we have a grow by volume. CP explained partially, but volume explained also. At the group level also, last year, our operating profit was -127. Today, we converted at 750,000. We are maintaining our core business in Malaysia. We have reduced the loss of Saudi, the engineering company we still have over there. PBT, it is now 471 versus 300 last year loss. At bottom line profit for us, it is really 300,000 positive compared to 350,000 negative last year. It is a good H1. I think both at the group size now, everything is under control. Everything is also well-managed, and we hope that we can maintain our stability regarding the margin and in the two main activity in Malaysia and Oman. Next. I only to share with you some product we have before closing my presentation.

Speaker #2: It's a good H1. I think, both at a group size now, everything is under control. Everything is also well managed, and we hope that we can maintain our stability regarding the margin and in the two main activities in Malaysia and Oman.

Speaker #2: Next, I'd like to share with you some projects we have before closing my presentation. We have converted, because a lot of customers are coming to us in Oman, switching from natural gas to LPG because it is still subsidized for industry and it's cheaper.

Rachid Majjad: We have converted because a lot of customer are coming to us in Oman, switching from natural gas to LPG because it is still subsidized for industry and it is cheaper. It is Oman Chlorine. It has been completed and running, fully designed, purchased, executed, and commissioned, and the AMC with us, and the customer is very happy. Next. The second one, it is a Global Integrated Engineering, Duqm Salt. It is a small project compared to the previous one, but we have also finished probably, and Duqm Salt is growing as per their commitment. Next. This is for me. This is that all. Thank you for your time. Thank you for your attention. I will stop here. We are ready to take any question. Please raise your hand and we will try to Mr. Shahur, please go ahead.

Speaker #2: It's Oman Chlorine. It has been completed and is running fully—designed, purchased, executed, and commissioned—and the AMC is with us. The customer is very happy.

Speaker #2: Next, the second one is Global Integrated Engineering, Doom Salts. It's a small project compared to the previous one, but we have also finished it properly, and Doom Salt is growing as per their commitments.

Speaker #2: Next. This is for me. That is all. Thank you for your time. Thank you for your attention. We are ready to— I will stop here.

Speaker #2: We're ready to take any questions. Please raise your hand, and we will try to—Mr. Shahur, please go ahead.

Speaker #1: Yes, hi. Good morning. Thank you for the presentation, and congratulations on a good set of numbers. I have a couple of questions. To begin with, obviously, we have seen very good improvement in the company's financials.

[Analyst]: Yes. Hi. Good morning. Thank you for the presentation, and congratulations on a good set of numbers. I have a couple of questions. To begin with, obviously, we have seen very good improvement in the company's financials this year. As you mentioned, this is partly because of the transformation that you were having this year. My question is, how sustainable is this profit going forward? Obviously, we have seen your operating profit to turn positive, but even if it were not for the other income, the finance cost would still have caused a red line on the profit after tax level. How sustainable and how much more improvement do you see in these numbers going forward?

Speaker #1: This year, as you mentioned, this is partly because of the transformation that you were having this year. My question is: How sustainable is this profit going forward?

Speaker #1: So, obviously, we have seen your operating profit turn positive. But even if it were not for the other income, the finance cost would still have caused a red line on the profit after tax level.

Speaker #1: So, how sustainable are these numbers, and how much more improvement do you see in the numbers going forward?

Speaker #2: So first of all, the financing cost has increased in Oman slightly, a little bit, due to our acquisition last year of Indofar of Samarram Gas, which has been planned and it's absorbed by the benefit and the dividend we get also from this company.

Rachid Majjad: First of all, the financing cost has increased in Oman slightly, a little bit due to our acquisition last year of Indofar of Samahram Gas, which has been planned, and it is absorbed by the benefit and the dividend we get also from this company, number one. Number two, for us, the operating profit is the main things. It has been negative for a long time now. We have sustained it by three aspects. Number one, by the filling price now. We have discontinued the discounted price because before it was common practice in the market by all players to give a discount to the distributor to retain and so on. Now we have stopped this one and say now we are applying only the price as per the law, OMR 1.9, and this is fixed.

Speaker #2: Number one, number two, for us the operating profit is the main thing. It has been negative for a long time. Now we have sustained it by three aspects.

Speaker #2: Number one, by the final price now, we have this computed—the discounted price—because before, it was common practice in the market by all players to give a discount to the distributor, to the retailer, and so on.

Speaker #2: Now we have stopped this one, and say we are applying only the price as per the law—1.9 rial—and this is fixed. We have started in January 2026 for some areas, and on 1st of September 2026, we will start for Muscat, which is the main one.

Rachid Majjad: We have started on 26 January for some area, and 1 September 2026 will be started for Muscat, which is the main one. This is the first sustainability for us which will help us for the next 2 to 3 years to sustain our core business. For the bulk aspect, there is a challenge on the table, has been raised by OQ and the Ministry. Shall we continue or not subsidy the bulk? This is a question not coming from us, but coming from the government. As you know, the subsidy burden, the last H1 established last year by Oman. It is huge due to the crisis and so, but this question was before Iran war, to be honest with you. This is the question mark for us. What will be the price for the industry tomorrow for bulk? Which industry will be impacted?

Speaker #2: This is the first sustainability for us, which can help us for the next two to three years to sustain our core business.

Speaker #2: For the bulk aspect, there is a challenge on the table that has been raised by OQ and the Ministry: shall we continue or not subsidize the bulk? This is a question not coming from us, but coming from the government. As you know, the subsidy burden—the last H1 was published last year by Oman—it's huge due to the crisis and so on. But this question was before the Iran war, to be honest with you, and then...

Speaker #2: This is the question mark for us: what will be the price for the industry tomorrow for bulk? Which industry will be impacted, and who can absorb the up international price? International price means, what you are today selling at 75 rial per metric ton in Oman with subsidy to industry; tomorrow you will sell at 300, meaning multiply by four to five times sometimes. Who can absorb? We have some guys who can absorb that, some others cannot. Government needs to think about how to compensate them and how to support them. This is the question for us, to answer your sustainability, which is not in our hand, which is a government issue. Because as you know, we are in a business which is not under our control fully. On the top we have OQ and on the down we have the Ministry who are regulating the price, and we are in the middle. And since 1994, we have been absorbing all the cost that has been engaged by the country and by the environment.

Rachid Majjad: Who can absorb the international price? International price means what? You are today selling at OMR 75 per metric ton in Oman subsidy to industry. Tomorrow you will sell at 300. Means multiply by 4 to 5 sometimes. Who can absorb? We have some guys who can absorb, but some others, government need to think about how to compensate them and how to support them. This is the question for us to answer your sustainability, which is not in our hand, which is a government. Because as you know, we are in a business which is not under control fully. On the top, we have OQ, and on the down, we have the Ministry who are regulated the price, and we are in the middle. Since 1994, we are absorbing all the cost has been engaged by the country and by the environment.

Speaker #2: We are confident for the next three years that if nothing changes and everything stays stable, like in 2026, we can perform roughly a positive result at the bottom line.

Rachid Majjad: But we are confident for the next 3 years, if anything change, everything stays stable like 2026, we can perform a roughly positive result at the bottom line. At a group level, Malaysia is doing well, is growing, but to be very honest with you, in Malaysia, the government is supporting in this period because they are exposed to international pricing and so on. The government is helping all the player to sustain, and we are still getting market share. We are still number 2 in Malaysia, and we are also starting from 2027, a new strategy how to grow beyond Malaysia. In Asia, mainly we are looking deeply in Thailand, Vietnam, and Indonesia, which is neighbor country for us, and same aspect, same rules, and same condition also, weather-wise and so on. We can apply the same rules what we have learned the last 15 years in Malaysia.

Rachid Majjad: We are confident for the next 3 years, if anything change, everything stays stable like 2026, we can perform a roughly positive result at the bottom line. At a group level, Malaysia is doing well, is growing, but to be very honest with you, in Malaysia, the government is supporting in this period because they are exposed to international pricing and so on. The government is helping all the player to sustain, and we are still getting market share. We are still number 2 in Malaysia, and we are also starting from 2027, a new strategy how to grow beyond Malaysia. In Asia, mainly we are looking deeply in Thailand, Vietnam, and Indonesia, which is neighbor country for us, and same aspect, same rules, and same condition also, weather-wise and so on. We can apply the same rules what we have learned the last 15 years in Malaysia.

Speaker #2: At a group level at a group level Malaysia is doing well is growing but still but to be very honest with you in Malaysia the government is supporting in this in this period because they are exposed to international pricing and so on the government is helping hold the player to sustain and we are still getting market share we are still number two in Malaysia and we are also starting from 27 a new strategy how to growth beyond the Malaysia in as Asia mainly we are looking deeply in Thailand Vietnam and Indonesia which is neighbor country for us and same aspect same rules and same same condition also weatherwise and so on and we can apply the same rules what we have learned the last 15 years in in Malaysia.

Speaker #1: Thank you to that thank you for the explanation that has just from my understanding how different are the dynamics here in Oman if we are if if you are catering to the the retail segment versus the bulk for supply of LPG and cylinders.

[Analyst]: Thank you for the explanation. That helps. Just for my understanding, how different are the dynamics here in Oman, if you are catering to the retail segment versus the bulk for supply of LPG and cylinders?

Speaker #2: But today today in in in bulk the government is opening a new rules probably to give license to a certain player who have the capacity to store to supply and so which today we don't have this distinction between retail and bulk probably it will come in 27 and it will also probably will be an opportunity for us because we have a lot of small player they have no storage they have no HSC they have no liability they have no AMC are doing bulk in this country today which we are they are competing against us.

Rachid Majjad: Today in bulk, the government is opening new rules probably to give license to a certain player who have the capacity to store, to supply and so, which today we don't have this distinction between retail and bulk. Probably it will come in 2027, and it will also probably be an opportunity for us because we have a lot of small player. They have no storage, they have no HSE, they have no liability, they have no AMC, are doing bulk in this country today, which they are competing against us. This can be also an opportunity for us in 2027, and we are working on this direction by the support of the Ministry. He want also to see how we can improve the market and the dynamic.

Speaker #2: This can also be an opportunity for us in 2027, and we are working in this direction with the support of the Ministry. He also wants to see how we can improve the market and the dynamics.

Speaker #1: Okay, so the bulk market segment is competitive—or is it also fixed by the government at what price you can sell?

[Analyst]: Okay. So the bulk market segment is competitive, or is it also fixed by the government at what price you can sell?

Speaker #2: No no it's it's it's also it's also subsidized by the government today. It's it's only subsidized by the purchase cost. The purchase cost now in in as a sale price is open okay but who will pay 300 real if I sell it at international price right.

Rachid Majjad: No, it's also subsidized by the government today.

[Analyst]: The prices.

Rachid Majjad: It is only subsidized by the purchase cost. Now at the sale price is open. Okay? But who will pay OMR 300 if I sell it at international price?

[Analyst]: Right. Okay. So that is competitive. You and the other players, they compete for the bulk segment. Is that correct?

Speaker #1: Okay so so that's competitive I mean you and the other players they they compete for the bulk segment is that correct. Okay perfect thank you my next question is on your new license that you gained in in in the kingdom of Saudi Arabia and how how do you expect these licenses to impact you and in what timeline if you could give us some numbers on that front.

Rachid Majjad: Exactly. Yes.

[Analyst]: Okay, perfect. Thank you. My next question is on your new license that you gained in the Kingdom of Saudi Arabia, and how do you expect these licenses to impact you, and in what timeline? If you could give us some numbers on that front.

Speaker #2: What what I can share with you it's a new area a new entry the business will be the same size like Malaysia we have take over 15 years ago from Shell we are speaking about the same size of volume projection we have given our projection business plan to the ministry it's why we have been considered and approved and considered as a major player and sustainable player number two timeline the bulk one we are hoping that we need one year to execute execute means want find the land get the license get the HSC because the process of getting the license is very long because we are going from ministry of interior ministry of defense ministry of energy minister of labor all of them need to approve a whole process and we hope for the bulk because there is no construction it's 12 month starting from 1st of September 26 and the second one which is the refill usually to build a plant internationally it takes minimum two years and we are trying to do in maximum two years then starting from 1st of October 26 we can then the benefits the gain of these two license we will see for the first one in probably beginning of 208 if I'm not wrong Mr. Mukesh correct.

Rachid Majjad: What I can share with you, it is a new area, a new entry. The business will be the same size like Malaysia. We have taken over 15 years ago from Shell. We are speaking about the same size of volume projection. We have given our projection business plan to the Ministry. It is why we have been considered and approved and considered as a major player and sustainable player. Number 2, timeline. The bulk one, we are hoping that we need 1 year to execute. Execute means, one, find the land, get the license, get the HSE, because the process of getting the license is very long because we are going from Ministry of Interior, Ministry of Defence, Ministry of Energy and Minerals, Ministry of Labour. All of them need to approve the whole process. We hope for the bulk, because there is no construction.

Rachid Majjad: It is 12 months starting from 1 September 2026. The second one, which is the refill. Usually, to build a plant internationally, it takes minimum 2 years, and we are trying to do in maximum 2 years. Starting from 1 October 2026, we can. The benefit, the gain of these 2 licenses, we will see for the first one in probably beginning of 2028, if I am not wrong, Mr. Mukesh. Correct?

Mukesh Darji: Yes.

Mukesh Darji: Q1 2028. The benefit from the license refill will be probably Q1 2029. Correct?

Rachid Majjad: Q1 2028. The benefit from the license refill will be probably Q1 2029. Correct?

Speaker #2: And the benefit from the license renewal will be probably in Q1 2029, correct? This is, as a calculation, this is where we see in between now. We are working, starting recruiting, building, getting the paperwork done, and so on, to be ready for the next 25 years, because the land license is 25 years minimum, renewable if everything goes smoothly.

Mukesh Darji: Yes.

Rachid Majjad: This is as a calculation. This is where we see. In between, now we are working, starting, recruiting, building, getting the paperwork done, and so on, to be ready for the next 25 years, because the license is 25 years minimum, or renew if everything goes smooth. We really have a very strong support from the Ministry of Energy and Minerals of Saudi today to execute properly and to stay in the country for long period, like we are in Oman since 45 years. It is also part of our credential. It is why we have been qualified.

Speaker #2: And we really have very strong support from the Ministry of Energy of Saudi today to execute properly and to stay in the country for a long period, like we have been in Oman for 45 years.

Speaker #2: It's also part of our credential. It's why we have been qualified.

Speaker #1: Perfect. Thank you. Thank you for the explanation. That helps a great deal, and I have a small follow-up question. When you say that, obviously the contributions will flow to the top line and the bottom line, it would be on the group level, right?

[Analyst]: Perfect. Thank you. Thank you for the explanation. That helps a great deal. A small follow-up question. When you say that obviously there is the contributions that will flow to the top line and the bottom line, it would be on the group level, right?

Speaker #1: How would it affect your numbers at the parent level?

Rachid Majjad: Yes.

[Analyst]: How would it affect your numbers on the parent level?

Speaker #2: Parent level will stay as it is today. We are building two new companies in Saudi—one for bulk and one for refill. And these two companies will have their own P&L.

Rachid Majjad: Parent level will stay as it is today. We are building two new company in Saudi, one for bulk, one for refill. These two company, they have their own P&L audited by the Ministry of Energy and Minerals in Saudi. This is their request also. We are 51, and we will consolidate them as a group level like we are consolidating today the existing engineering company in Saudi.

Speaker #2: Audited by the Ministry of Energy in Saudi. This is where requests also, and we are 51, and we will consolidate them at the group level, like we are consolidating today the existing engineering company in Saudi.

Speaker #3: And at the parent level, it will impact, to the extent, how we get the financing done for this project. Depending on that, once we finalize it, we'll know.

Mukesh Darji: Parent level, it will impact to the extent how we get the financing done for this project, depending on that. Once we finalize that, we will know.

Speaker #1: Okay so so just in in plain terms my question is that the benefit of these companies these new licenses they will obviously flow on the group level but would any dividends or any any cash flows be be flown to the parent level from which the shareholders of NGC would you know get a significant benefit.

[Analyst]: Okay. Just in plain terms, my question is that the benefit of these companies, these new licenses, they will obviously flow on the group level, but would any dividends or any cash flows be flown to the parent level from which the shareholders of NGC would get a significant benefit?

Speaker #2: Nevertheless, the parent or group for us is the same. We are getting consolidation, number one, because we want consolidation. We have the management, and we will get 51% of the dividend for the company in Saudi.

Rachid Majjad: Nevertheless, parent or group for us is the same. We are getting consolidation, number one, because we want consolidation. We have the management, and we will get 51% of the dividend for both company in Saudi. This is the deal we have negotiated with our Zamil Group partner. Again, it will be depending, and we will give you more info in the next meeting about how the finance structure will be set up properly in parent, in group, in Saudi or not, in the holding. Are we creating a holding or not? Because it's two company with shared services and so on. To be honest with you today, 26 August 2026, it's a little bit early. We are still finalizing with our partner what is the best option on the tax purpose, on the Saudi purpose, Saudization, et cetera. There is a lot of parameter on the pack.

Speaker #2: This is the deal we have negotiate with our Zamil group partner. Again it will be depending and we will give you more info in the next meeting about how the finance structure will be set up properly in in parent in group in Saudi or not in the holding are we creating a holding or not because it's two company with with share services and so on to be honest with you today 26th of August 26 it's a little bit early we are still finalizing with with our partner what is the best option on the tax purpose on the Saudi purpose Saudization etc.

Speaker #2: There are a lot of parameters on the back.

Speaker #1: All right, great. Now, I understand, obviously, the dynamics of the license. It's too soon to comment on the actual distribution or the profitability of that, but yeah, okay. So, we'll probably discuss it in detail in the next meetings.

[Analyst]: All right. Great. No, I understand, obviously, the dynamics of the license. It's too soon to comment on the actual distribution of the profitability of that. Yeah. Okay. We'll probably discuss it in detail in the next meetings. My final question is regarding your current structure. Obviously the revenues and the profitability will start flowing in from 2028 and 2029 Q1s for both the licenses. As you mentioned that if things were constant, you expect the bottom line to not be in loss in the next couple of years, at least, because of the transformations that you have done. What is this other income coming in from, and how sustainable is this? If you see on the parent level, there's OMR 175,000 other income. If you could give us some details on that.

Speaker #1: My final question is regarding your current structure. So, obviously, the revenues and the profitability will start flowing in from 2028 and 2029 Q1s for both the licenses.

Speaker #1: As you mentioned, if things were constant, you would expect the bottom line not to be in loss in the next couple of years, at least because of the transformations that you have done.

Speaker #1: What is this other income coming in from, and how sustainable is this? If you see, on the parent level there's a $175,000 other income.

Speaker #1: If you could give us some details on that.

Speaker #2: Mr. Mukesh.

Rachid Majjad: Mr. Mukesh?

Speaker #3: Yeah. In other income, it includes 85,000, which is ECL reversal, and around 75,000 we got as dividend from our investment in Muscat Securities Market. The remaining are other small incomes.

Mukesh Darji: Yeah. In other income, it includes 85,000, which is ECL reversal, and 75,000 around we got the dividend from our investment in Muscat Stock Exchange, and remaining are other small incomes. But main two items is this, 85,000 is for ECL reversal and 75,000 is the dividend. 75,000 is recurring mainly. ECL may not be recurring going forward unless we have some other cases, ECL provision we recover and get it reversed. So that is uncertain, but dividend is certain, which we are getting every year from our investment.

Speaker #3: The main two items are this: 85,000 is for ECL reversal, and 75,000 is the dividend. The 75,000 is recurring, mainly. ECL may not be recurring going forward, unless we have some other cases where ECL provision is recovered and gets reversed.

Speaker #3: So, that is uncertain, but the dividend is certain, which we are getting every year from our investment.

Speaker #1: Okay, perfect. Thank you. That's all from my side for now.

[Analyst]: Okay, perfect. Thank you. That is all from my side for now.

Speaker #2: Thank you, Mr. Saul. Does anyone else have another question? Okay, if there are no other questions, I think, Ms. Management, we can close this session.

Rachid Majjad: Thank you, Mr. Sarol. Someone else has another question? Okay. If no other question, I think, the management, we can close this session. Thank you for all of you. Thank you for your support, and we will see you, Inshallah, in Q3 for October data. Thank you. As-salamu alaykum.

Speaker #2: Thank you, all of you. Thank you for your support. And we will see you, inshallah, in Q3 for October data. Thank you.

[Analyst]: The recording has stopped.

Speaker #4: The recording has stopped.

Mukesh Darji: Yeah. You can leave me.

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Q2 2026 National Gas Co SAOG Earnings Call

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