Emirates Reem Investments Company

1. Company Overview & Earnings Context

Emirates Reem Investments Company P.J.S.C. is a Dubai Financial Market-listed company whose operations include bottling and selling mineral water, manufacturing plastic bottles and containers, and trading products including tissues, snacks, carbonated drinks, cereals, coffee, dates and juices. The Group sells across the UAE, other Middle Eastern markets and Africa.

H1 2026 showed a sharp increase in revenue but a significant deterioration in overall profitability. Net revenue nearly doubled to AED 190.5 million, but the Group moved from an AED 8.3 million profit in H1 2025 to a AED 1.3 million net loss in H1 2026.

2. Financial Performance Snapshot

• Net Revenue: AED 190.46 Million (+98.8% YoY)

• Gross Profit: AED 25.26 Million (+19.9% YoY)

• Operating Profit: AED 2.32 Million (-30.9% YoY)

• Loss Before Tax: AED 1.35 Million, vs. AED 9.15 million profit

• Net Loss: AED 1.29 Million, vs. AED 8.29 million profit

• Loss Attributable to Owners: AED 1.12 Million, vs. AED 8.25 million profit

• Loss Per Share: AED 0.0035, vs. EPS of AED 0.0258

The key takeaway is that revenue growth did not translate into earnings growth, as cost of sales and operating expenses increased substantially and the investment portfolio recorded a fair-value loss.

3. Revenue Growth & Geographic Performance

Revenue growth was exceptionally strong during H1. Net revenue increased from AED 95.8 million to AED 190.5 million, almost doubling YoY.

The UAE remained the Group's largest market, but international sales expanded significantly:

• UAE Revenue: AED 149.06 Million, up from AED 92.64 million

• Revenue Outside UAE: AED 41.40 Million, up from AED 3.18 million

This means UAE revenue increased approximately 60.9%, while international revenue grew more than 13 times compared with H1 2025.

One customer generated AED 40.72 million of revenue, representing more than 10% of total Group revenue.

4. Key Performance Drivers

Despite the near-doubling of revenue, cost of sales increased to AED 165.2 million from AED 74.8 million, significantly outpacing revenue growth. Direct material costs alone increased to AED 156.5 million from AED 69.9 million.

As a result, gross profit increased only 19.9% to AED 25.3 million despite revenue rising almost 99%. Selling and distribution expenses also increased to AED 13.1 million from AED 9.2 million, while general and administrative expenses increased to AED 9.9 million from AED 8.5 million.

Investment performance was another major factor. Emirates Reem recorded a AED 3.78 million fair-value loss on FVTPL investments, compared with an AED 4.01 million fair-value gain in H1 2025. Finance income also declined to AED 1.22 million from AED 2.91 million.

These factors pushed the Group from profit into a net loss despite the strong top-line growth.

5. Balance Sheet, Investments & Cash Flow

Emirates Reem ended June 2026 with:

• Total Assets: AED 426.23 Million

• Total Equity: AED 357.58 Million

• Total Liabilities: AED 68.65 Million

• Cash & Bank Balances: AED 77.56 Million

• Trade & Other Receivables: AED 172.05 Million

• Financial Investments: AED 23.41 Million

• Bank Borrowings: AED 1.30 Million

Operating cash flow remained negative at AED 31.58 million, although this improved from negative AED 59.91 million in H1 2025. The major working-capital pressure came from a AED 64.17 million increase in trade and other receivables.

Meanwhile, cash and cash equivalents increased to AED 30.80 million from AED 12.36 million at the beginning of the year, helped by AED 51.98 million of net cash generated from investing activities, largely reflecting a reduction in fixed deposits.

6. Investor Takeaway

Emirates Reem's H1 2026 results were mixed. The standout positive was the 98.8% increase in net revenue, supported by strong UAE growth and a significant expansion in international sales. However, the much faster increase in cost of sales compressed margins and prevented the revenue growth from translating into stronger earnings.

The Group ultimately recorded a AED 1.29 million net loss, compared with AED 8.29 million profit a year earlier. Investment losses and lower finance income also contributed to the earnings decline.

An important point to monitor is the AED 58.3 million long-outstanding related-party receivable highlighted by the independent auditor. The balance is unsecured, non-interest-bearing and has no formal repayment terms. Management expects full recovery, but the auditor noted a risk that its carrying amount may not be fully recoverable. The auditor's review conclusion was not modified in respect of this matter.

Key areas to monitor in H2 2026 are gross margins, direct material costs, international revenue growth, operating cash flow, receivables collection and the recovery of the related-party balance.