Chief Financial
Officer's Review

In 2024, Kingdom Holding Company (KHC) achieved a net profit of 1.237 Bn., reflecting a 22% increase from 1.013 Bn. in 2023, net asset value reached 59.9 Bn.

This marks the fourth consecutive year in which the company has delivered a net profit exceeding 1 Bn., reinforcing our commitment to consistent financial performance. Notably, 2024 stands as one of our best-performing years, second only to 2022, when a one-off gain of 5.9 Bn. from the partial sale of our Four Seasons stake significantly boosted earnings.

Key Profit and Loss Drivers

KHC’s strong performance in 2024 was driven by several key factors:

• A 123 Mn. gain from the sale of a compound, reflecting our ability to monetize strategic assets efficiently.
• Share of results from equity-accounted investees, which continues to be a preferred investment model for KHC in high-value strategic projects.

Performance of Key Investments

Our diversified investment strategy has yielded robust returns across multiple sectors:

• BSF (Banque Saudi Fransi): Continued stable performance, further reinforcing our long-term commitment to the banking sector.
• Flynas: The company delivered strong financial results, leading to the reversal of a 200 Mn. impairment loss recognized in previous years.
• Accor: Strong business performance reflected in share price growth, reaffirming its position as a leading global hospitality player.
• JEC (Jeddah Economic Company): The October 2024 restart of the Jeddah Tower project marked a major milestone, widely covered in the media, signaling future upside potential for shareholder value. A significant yet lesser-highlighted development was KHC’s increase in its stake from 33.4% to 35.74%, a move that will contribute positively to the company’s net asset value (NAV) in the long run.

A key contributor to KHC’s improved profitability in 2024 was the reduction in finance costs, achieved through lower debt levels and strategic portfolio optimization. This year, total borrowings decreased by 15.86%, while finance costs declined by an even stronger 30.99%, reflecting a combination of lower outstanding debt, favorable interest rate movements, and proactive financial management.

KHC benefited from rate cuts in the latter part of the year, which, coupled with our active debt optimization strategies, enabled us to significantly reduce borrowing costs. These initiatives included:

• Renegotiating loan contracts to secure more favorable terms,
• Capitalizing on lower Euro interest rates while managing currency exposure through a natural hedge embedded in our international investment portfolio, and
• Executing a robust utilization and settlement strategy, efficiently allocating liquidity and reducing excess leverage.

These disciplined financial actions have not only strengthened our balance sheet but also enhanced our overall cost efficiency, positioning KHC to benefit from a lower cost of capital in the years ahead.

As of 31 December 2024, KHC total debt stood at 12.6 Bn., reflecting a 15.86% reduction from the previous year. This represents the lowest debt level for KHC since 2016, underscoring a significant achievement in financial repositioning and capital discipline.

This milestone follows a deliberate strategy initiated in 2020, when KHC ballooned its debt to capitalize on an era of historically low interest rates. The additional capital was strategically deployed across a diversified mix of dividend-yielding and growth-oriented investments, enhancing long-term shareholder value. However, as interest rates began rising sharply from 2022 onwards, a pivot in capital allocation strategy was undertaken. This involved exiting select mature positions, leveraging proceeds from the sale of a real estate compound, and the early recovery of a sizable long-term receivable—all of which were directed toward reducing debt and reinforcing the balance sheet.

With this deleveraging, KHC has not only reduced its financing costs and improved financial resilience, but also unlocked dry powder—positioning the company with ample liquidity and flexibility to capitalize on attractive investment opportunities that may emerge in a shifting market environment.

As of December 31, 2024, KHC shareholder equity stood at 38.93 Bn., reflecting a 3.76 Bn. increase from the previous year. Over the past five years, shareholder equity has grown by 8.13 Bn., underscoring the company’s ability to generate sustainable value over time.

KHC’s consistent profitability has played a fundamental role in strengthening equity. With net profit exceeding 1 Bn. for the fourth consecutive year, retained earnings have continued to expand. At the same time, the company remains committed to rewarding shareholders, ensuring a balanced approach between reinvestment and stable dividend distributions.

A key factor influencing shareholders’ equity movement has been the Fair Value through Other Comprehensive Income (FVOCI) reserve, which saw a substantial reduction in unrealized losses in 2024. Some of the key enhancements included KHC’s move to average down its position in Citi, which contributed to stabilizing the FVOCI reserve. Additionally, a broader market recovery and selective investment rebalancing played a role in reducing unrealized losses, while the upward revaluation of xAI following its Series C funding round further strengthened FVOCI reserve performance.

Despite market volatility, KHC’s disciplined investment strategy and active portfolio management have strengthened its balance sheet, ensuring resilience in changing economic environments.

As an investment holding company, KHC remains deeply committed to long-term shareholder value creation. Through financial discipline, portfolio optimization, and a sustainable dividend strategy, the company continues to deliver strong returns and position itself for future opportunities.