Source FY2025 audited financial statements, restated in the modelWorkings data appendixUpdated 24 September 2026
The read
The widest gross margin in the cohort at 54.8%, earned on the second-largest daily milling capacity, and the narrowest spread over cost of capital of the four: 14.3% against 9.7%, or +4.6pt. Both facts have the same cause.
Arabian Mills was bought with a purchase premium of SAR 883M and a debt package that took borrowings past two billion riyals. It has spent every year since paying that down, out of the best free cash flow in the sector at SAR 373M and while distributing the least, 21.6% of net profit. Debt to equity is now 0.77x with interest covered 5.5x over. On operating capital the business earns 23.7%; the distance from there to its reported 14.3% is the purchase price, still being carried.
The operational question is a different one from the financial question. Its capacity is close to the largest in the cohort and its utilization is the lowest, and revenue grew +2.4% in FY2025, the slowest of the four. A miller with spare capacity and a granted margin has an obvious way to grow. That it has not yet is the thing to watch.
The bet it made
Arabian Mills was the most heavily financed of the four. The acquisition brought a purchase premium of roughly 880 million riyals and borrowings that peaked above two billion riyals.
Everything since has been repayment. Borrowings are down by more than half from the peak, the payout ratio is the lowest in the cohort and free cash flow is the highest. This is a company being run for its balance sheet rather than for its income statement.
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|---|---|---|
| First Mills | 1.1% | 7.6% | 4.9% | 4.8% | 4.2% | 12.4% | 5.5% | 7.4% |
| Modern Mills | 2.2% | 3.0% | 4.7% | 3.3% | 3.5% | 6.0% | 10.6% | 13.3% |
| Arabian Mills | n/a | n/a | 7.7% | 14.5% | 8.1% | 2.3% | 1.9% | 5.8% |
| Fourth Mills | n/a | n/a | 7.5% | 6.2% | 12.8% | 1.8% | 2.5% | 5.4% |
Where the volume comes from
Regulated flour
4,920 tons a day of wheat milling capacity, second-largest in the cohort, and 1.50 million tons milled in 2025. Utilization of 90% is the lowest of the four, which is the only free growth available to anybody here.
Bran and feed
600 tons a day of feed capacity, the smallest in the cohort, against 1,230 tons a day of bran. Relative to its size this is the company least exposed to the unregulated half of the ton, for better and for worse.
Beyond the allocation
Its gross margin is the widest of the four and has been for several years. On an administered price that says the difference sits in product mix and cost base, not in what it charges.
What it does with the money
Almost all of it has gone to lenders. That is the right order of operations for a company that came out of privatization with the heaviest debt package, and it is why the equity has rebuilt as fast as it has.
The question the next few years answer is what happens when the deleveraging is done. A company retaining four fifths of its earnings with the lowest utilization in the cohort has both the cash and the physical room to grow, and has used neither yet.
What comes back to shareholders
Of what it earned in FY2025, Arabian Mills declared SAR 1.00 a share, 21.6% of net profit, against free cash flow of SAR 373M. Every riyal a miller earns arrives at the same fork: back into the plant, or out to shareholders. That ratio is the answer this one gave.
In context
This company only means something next to the other three and against the economics of the industry they share.
Read the industry piece See it against the others