Dar Al-Arkan half-year revenue rises 31.3%, but finance costs limit profit growth

What did Dar Al-Arkan report?

Dar Al-Arkan has reported a strong increase in property sales for the six months ended 30 June 2026, with revenue and operating profit both growing by more than 30%.

The announcement, issued under Dar Al-Arkan Sukuk Company Ltd, contains the interim financial results of Dar Alarkan Real Estate Development Company. All reported financial figures are in millions of Saudi Arabian riyals.

First-half revenue increased by 31.3% to SAR 2,343.27 million, while operating profit rose by an even stronger 39.3% to SAR 962.90 million. Net profit after Zakat and tax increased by 11.4% to SAR 498.97 million.

Zakat is a religious levy applied under Saudi Arabia's tax framework. Investors can review the original company announcement for the full regulatory tables.

Dar Al-Arkan's key half-year figures

Metric	First half 2026	First half 2025	Change
Revenue	SAR 2,343.27 million	SAR 1,784.14 million	31.3%
Gross profit	SAR 1,064.90 million	SAR 817.42 million	30.3%
Operating profit	SAR 962.90 million	SAR 691.02 million	39.3%
Net profit after Zakat and tax	SAR 498.97 million	SAR 447.96 million	11.4%
Total comprehensive income	SAR 482.59 million	SAR 434.30 million	11.1%
Earnings per share	SAR 0.46	SAR 0.41	Not disclosed
Shareholders' equity	SAR 22,710.03 million	SAR 21,528.91 million	5.49%

The company attributed the revenue increase primarily to higher property sales. That is straightforward enough, but the differing rates of profit growth tell a more interesting story.

Operating profit grew faster than revenue, suggesting an improvement in operating efficiency. However, net profit growth was considerably slower because finance costs increased during the period.

Operating performance was the main strength

Gross profit increased by 30.3%, broadly tracking the 31.3% revenue improvement. Based on the reported figures, the gross margin was approximately 45.4%, compared with 45.8% in the equivalent period last year.

That small decline does not look particularly dramatic on its own. More encouragingly, the operating margin increased from approximately 38.7% to 41.1%, with operating profit rising 39.3%.

Dar Al-Arkan said lower operating expenses helped support earnings. The company also benefited from higher lease revenue and increased non-operating income from Islamic Murabaha deposits. Murabaha is an Islamic cost-plus financing arrangement, structured without conventional interest.

The combination of stronger property sales, lower operating expenses and additional income from deposits helped deliver a substantial improvement before finance costs.

Why did net profit grow more slowly?

The first-half net profit increase of 11.4% was positive, but it lagged well behind the increases in revenue and operating profit.

Higher finance costs were the main reason. The company did not disclose the amount of those costs in this announcement, so investors cannot judge their full scale from the headline tables alone.

Based on the reported figures, the net profit margin fell from approximately 25.1% to 21.3%. This shows that more of the operating improvement was absorbed below the operating profit line.

That matters particularly when assessing a property business and a sukuk-linked issuer. A sukuk is a Sharia-compliant financing certificate. Although it is structured differently from a conventional bond, investors still need to consider the issuer's earnings, financial obligations and capacity to meet payments.

The announcement did not disclose cash, borrowings, net debt, finance-cost coverage or operating cash flow. Those omissions do not mean there is a problem, but they limit the conclusions investors can draw about financial resilience.

The second quarter was more mixed

The latest quarterly numbers were less clear-cut than the half-year totals.

Metric	Second quarter 2026	Second quarter 2025	Change
Revenue	SAR 1,179.98 million	SAR 852.14 million	38.5%
Gross profit	SAR 531.80 million	SAR 410.85 million	29.4%
Operating profit	SAR 482.88 million	SAR 353.43 million	36.6%
Net profit after Zakat and tax	SAR 238.74 million	SAR 238.62 million	0.1%
Total comprehensive income	SAR 243.36 million	SAR 224.34 million	8.5%

Quarterly revenue rose by 38.5% year on year, yet net profit was almost unchanged at SAR 238.74 million. Again, increased finance costs diluted the benefit of higher property sales.

The pattern was similar compared with the previous quarter. Revenue increased by 1.4% and operating profit rose by 0.6%, but net profit declined by 8.3% from SAR 260.24 million.

This sequential fall is the clearest caution in the update. Dar Al-Arkan sold more property, but the additional activity did not translate into higher bottom-line earnings during the quarter.

Positives for investors

The headline trading performance was strong:

• First-half revenue rose by 31.3%.
• Operating profit increased by 39.3%.
• Net profit after Zakat and tax grew by 11.4%.
• Shareholders' equity increased by 5.49% to SAR 22,710.03 million.
• Lower operating expenses supported profitability.
• Lease revenue and income from Islamic Murabaha deposits provided additional support.
• The external auditor issued an unmodified conclusion, with no qualification or emphasis of matter.

An unmodified conclusion means the auditor did not identify a matter requiring qualification in its review of the interim financial information.

Risks and unanswered questions

The principal concern is the effect of rising finance costs. These costs held quarterly net profit growth to just 0.1% year on year and contributed to an 8.3% decline from the previous quarter.

Investors should also note that the announcement did not disclose several figures that would be useful for assessing financial strength, including:

• Cash and cash equivalents.
• Total borrowings or net debt.
• The absolute amount of finance costs.
• Operating cash flow.
• Property sales volumes or average selling prices.
• A dividend or distribution decision.
• Financial guidance for the full year.

The reliance on higher property sales also means future performance will depend partly on the timing and completion of transactions. No full-year sales or profit forecast was provided.

What matters after these results?

Dar Al-Arkan's first-half performance shows healthy property sales and strong operating profit growth. The company also reported higher equity and received an unmodified auditor conclusion.

However, finance costs are taking a noticeable bite from the improvement. The contrast is sharpest in the second quarter, when revenue grew by 38.5% but net profit was effectively flat year on year.

The next useful update will need to show whether property sales remain strong and, crucially, whether finance costs continue to restrict the conversion of operating profit into net earnings. For investors following the sukuk issuer, greater detail on borrowings, cash flow and financing obligations would provide a clearer view of the financial position.