Earnings Report
NMDC Group
1. Company Overview & Earnings Context
NMDC Group PJSC is an Abu Dhabi-based engineering and construction group primarily engaged in EPC contracts, dredging, marine works and associated land reclamation, with operations extending across the UAE and international markets including Saudi Arabia, India, Taiwan, Spain, Morocco and other jurisdictions.
The 9M 2026 period presents a clear divergence between top-line growth and margin performance. Group revenue increased 4% YoY to AED 21.4bn, but EBITDA declined 7% and net profit declined 14%. Management attributes the margin pressure principally to the challenging regional operating environment, including higher insurance, logistics and fuel costs.
The financial statements provide further context: regional geopolitical disruption resulted in cost overruns, idle hours, project delays and slower revenue recognition on certain offshore and onshore contracts. Management recorded provisions for additional costs, adversely affecting revenue and margins.
At the same time, NMDC retained substantial forward visibility, with management reporting a AED 54.1bn backlog including AED 2.8bn of NMDC Energy orders secured in October, alongside a roughly AED 104.4bn project pipeline.
2. Financial Performance Snapshot
9M 2026 vs. 9M 2025
Revenue: AED 21.408bn vs. AED 20.545bn — +4.2%
Gross profit: AED 2.842bn vs. AED 3.222bn — -11.8%
Gross margin: 13.3% vs. 15.7% — down ~240 bps
EBITDA: AED 3.559bn vs. AED 3.842bn — -7%
EBITDA margin: 16.6% vs. 18.7%
Share of equity-accounted investees: AED 41.2m vs. AED 65.0m
G&A expenses: AED 317.9m vs. AED 263.1m — +20.8%
Finance income: AED 141.2m vs. AED 138.7m
Finance costs: AED 72.5m vs. AED 74.4m
FX loss: AED 19.7m vs. AED 42.6m
FVTPL fair-value gain: AED 142.1m vs. AED 44.8m
Profit before tax: AED 2.746bn vs. AED 3.129bn — -12.3%
Net profit: AED 2.374bn vs. AED 2.764bn — -14.1%
Profit attributable to shareholders: AED 2.264bn vs. AED 2.540bn — -10.9%
EPS: AED 2.68 vs. AED 3.01 — -11.0%
Underlying Performance
The central issue in 9M 2026 was margin compression rather than weak revenue generation. Revenue expanded by approximately AED 863m, but contract costs increased faster, by roughly AED 1.24bn. As a result, gross profit declined approximately AED 380m and gross margin fell from about 15.7% to 13.3%.
Management's EBITDA measure tells the same story: EBITDA declined 7% despite 4% revenue growth, with the EBITDA margin contracting to 16.6% from 18.7%.
Q3 2026
Q3 showed more pronounced margin pressure:
Revenue: AED 7.275bn vs. AED 7.173bn — +1% YoY
EBITDA: AED 1.140bn vs. AED 1.385bn — -18%
EBITDA margin: 15.7% vs. 19.3%
PBT: AED 886m vs. AED 1.124bn — -21%
Net profit: AED 768m vs. AED 1.009bn — -24%
Shareholder net profit: AED 719m vs. AED 922m — -22%
Q3 revenue was also down 3% sequentially, while EBITDA declined 34% QoQ and net profit fell 37% QoQ.
This makes margin normalization and project execution the key near-term earnings variables.
3. Operating Performance & Major Programs
Dredging & Marine Remained the Profit Engine
The financial statements aggregate operations into Dredging & Marine and Energy.
For 9M 2026:
The segment data demonstrate a substantial profitability difference between the two businesses. Dredging & Marine generated only around one-third of consolidated revenue but represented the large majority of Group profit.
Management similarly reports that in 9M, D&M represented 34% of Group revenue but 82% of Group net profit, with its NPAT margin reaching 27.2%.
NMDC Energy Drove Revenue Growth
Management states that the Group's 4% revenue growth was driven primarily by NMDC Energy, whose revenue increased 9% YoY.
Local operations represented 78% of 9M revenue, with international operations accounting for 22%.
AED 9.7bn of New Awards
NMDC secured AED 9.7bn of project awards during 9M 2026, comprising:
NMDC D&M: AED 4.9bn
NMDC Energy: AED 2.6bn
NMDC Infra: AED 2.2bn
Major awards included AED 3.6bn of D&M dredging/reclamation/enabling works, AED 2.1bn of infrastructure projects and AED 2.3bn of offshore EPC work. Q3 additions included dredging projects in the UAE and India and an Energy diesel-pipeline EPC project.
Expansion into Water Infrastructure
NMDC completed the acquisition of a 51% controlling interest in Spain's Lantania Water on 11 June 2026 for provisional consideration of AED 82.2m.
The acquisition expands NMDC into desalination, water treatment, wastewater treatment and water-reuse infrastructure and represents a meaningful diversification of its infrastructure platform.
Management also highlights an EPC agreement for the 60 MIGD Fujairah Independent Water Producer project, with a total project value of AED 1.046bn, as well as a separate AED 288m emergency-lagoon contract awarded by TAQA Water Solutions.
Marine Capacity Expansion
NMDC inaugurated Abu Al Bakhoush, a new self-propelled heavy-duty cutter suction dredger. Management states that its marine fleet now comprises more than 170 vessels and marine units, increasing capacity for large and complex marine projects and supporting international expansion.
4. Key Performance Drivers
1. Regional Conflict Was the Main Margin Headwind
The most important earnings issue was geopolitical disruption.
Management specifically identified:
Higher insurance costs
Higher logistics costs
Higher fuel prices
Cost overruns
Idle offshore and onshore hours
Extended project timelines
Delayed revenue recognition on certain contracts
The financial statements confirm that provisions for additional costs were recognized during the period and adversely affected revenue and margins.
This helps explain why revenue increased 4%, while gross profit fell 12% and EBITDA fell 7%.
2. Business Mix Supported Profitability
Dredging & Marine's much stronger profitability provided an important cushion against pressure elsewhere.
In Q3 alone, D&M achieved a 33.4% EBITDA margin and generated approximately 78% of Group net profit despite contributing 35% of revenue.
This indicates that NMDC's consolidated profitability remains highly dependent on the mix and execution performance of its D&M portfolio.
3. Energy Growth Came With Lower Group Margin
Energy generated AED 14.215bn of 9M revenue, making it the Group's largest revenue segment, but only AED 599m of segment gross profit.
Therefore, continued Energy revenue growth without corresponding margin improvement can lift consolidated revenue while diluting Group margins.
4. Fair-Value Gains Provided Earnings Support
The Group recognized AED 142.1m of fair-value gains on FVTPL financial assets, compared with only AED 44.8m in 9M 2025.
This provided approximately AED 97m of incremental YoY support below gross profit and partly cushioned the operating-margin deterioration.
5. G&A Increased Faster Than Revenue
G&A increased approximately 21% to AED 317.9m, well above the 4% revenue increase.
While not the principal driver of the profit decline, continued overhead growth will be worth monitoring as NMDC expands geographically and adds businesses.
5. Balance Sheet, Backlog & Cash Flow
Balance Sheet
At 30 September 2026:
Total assets: AED 39.459bn vs. AED 39.684bn
Current assets: AED 29.298bn vs. AED 29.398bn
Cash & bank balances: AED 4.606bn vs. AED 4.980bn
Trade & other receivables: AED 13.413bn vs. AED 16.750bn
Contract assets: AED 9.408bn vs. AED 6.062bn
Inventories: AED 1.028bn vs. AED 886m
PPE: AED 7.542bn vs. AED 7.381bn
Total equity: AED 17.286bn vs. AED 15.881bn — +8.8%
Equity attributable to NMDC shareholders: AED 15.782bn vs. AED 14.393bn
Management reports debt of only AED 665m, resulting in AED 3.94bn of net cash, excluding lease liabilities.
The balance sheet therefore remains a major strength.
Working Capital
Net working capital increased to AED 4.248bn from AED 2.631bn at December 2025, driven particularly by higher contract assets.
Contract assets increased approximately 55% to AED 9.4bn, reflecting significant unbilled revenue as projects progressed. At the same time, trade and other receivables declined substantially to AED 13.4bn following strong collections.
Management states that collections reached AED 22.3bn in 9M 2026, equivalent to approximately 104% of period revenue.
Cash Flow
9M 2026 cash generation improved materially:
Operating cash flow: AED +2.002bn vs. AED -180m
Capex: AED 846m vs. AED 976m
Free cash flow: AED +1.156bn vs. AED -1.156bn
Investing cash outflow: AED 955m
Financing cash outflow: AED 1.558bn
Dividends paid: AED 1.028bn
Term-loan repayments: AED 295m
Lease repayments: AED 179m
Period-end cash equivalents: AED 4.406bn
Capex was directed toward the CSD dredger, NMDC Energy's Saudi yard, UAE yard upgrades and additional barges, pipelines and technical equipment.
Backlog & Pipeline
This remains one of NMDC's strongest investment attributes.
Management presents AED 54.1bn of backlog on a run-off basis, incorporating AED 2.8bn of NMDC Energy new orders secured in October 2026; the backlog at the end of September itself was AED 51.3bn.
Expected run-off is approximately:
2026: AED 6.9bn
2027: AED 23.2bn
2028: AED 15.4bn
2029: AED 6.7bn
2030: AED 1.5bn
2031: AED 0.4bn
The accompanying project pipeline is approximately AED 104.4bn, including submitted and prospective tenders, EOIs and future opportunities.
Backlog is approximately 79% local / 21% international, while the business-unit mix is roughly 60% D&M, 34% Energy and 6% Infra.
The scale of 2027–28 backlog provides strong medium-term revenue visibility, although backlog conversion margins are more important than backlog size alone given the cost pressures evident in 2026.
6. Investor Takeaway
NMDC Group's 9M 2026 results are best characterized as strong revenue visibility and balance-sheet health, but materially weaker near-term margins.
Revenue reached a record-scale AED 21.4bn and increased 4%, but the operating environment prevented that growth from translating into higher earnings. Gross margin fell from approximately 15.7% to 13.3%, EBITDA margin declined from 18.7% to 16.6%, and net profit declined 14% to AED 2.37bn. Q3 was particularly weak from a profitability perspective, with EBITDA down 18% and net profit down 24% YoY.
Importantly, the financial statements explicitly connect much of the margin deterioration to regional geopolitical disruption, logistics and insurance costs, fuel inflation, idle hours, cost overruns and delayed project execution rather than to a collapse in demand.
The counterbalance is a very strong financial and commercial position. NMDC has AED 3.9bn of management-defined net cash, AED 17.3bn of equity, positive AED 1.16bn free cash flow and a AED 54.1bn backlog including October awards. The roughly AED 104bn pipeline further supports long-term opportunity visibility.
Dredging & Marine remains particularly valuable: it generated the majority of Group profit at substantially higher margins than Energy. Meanwhile, the Lantania Water acquisition, NMDC Infra expansion and new water/desalination projects broaden the Group beyond its traditional dredging and energy EPC exposure.
For investors, the central question has therefore shifted from “Can NMDC win enough work?” to “At what margin can the existing backlog be executed?” The key monitoring points are gross and EBITDA margin recovery, Energy segment profitability, regional conflict and supply-chain conditions, contract-asset conversion into cash, working-capital discipline, backlog replenishment and execution of the large 2027–28 order book.
Overall, the long-term growth platform remains strong, supported by backlog, pipeline, net cash and diversification, but near-term earnings quality will depend heavily on whether project execution costs normalize after the significant 2026 geopolitical disruption.
Finally, Deloitte reviewed the 9M 2026 interim financial statements under ISRE 2410 and issued an unmodified review conclusion, stating that nothing came to its attention indicating that the financial information was not prepared, in all material respects, in accordance with IAS 34.
