Methanol Chemicals Co. Faces Mounting Financial Crisis in Q3 2025
Methanol Chemicals Company (CHEMANOL) has released its interim financial results for the nine-month period ending September 30, 2025, revealing a deepening financial crisis that underscores the challenging economic landscape facing regional chemical manufacturers.
Deteriorating Financial Performance
The Saudi-based chemical company reported staggering losses of SR 510.09 million for the nine-month period, representing a dramatic 563% increase from the SR 76.94 million loss recorded in the same period of 2024. This alarming deterioration reflects the broader industrial challenges facing the region's manufacturing sector.
For the third quarter alone, CHEMANOL posted a net loss of SR 42.36 million, compared to SR 24.43 million in the corresponding quarter of the previous year. Revenue declined by 12.2% to SR 157.53 million, primarily due to reduced selling quantities and lower product prices.
Operational Challenges and Market Pressures
The company's struggles stem from multiple factors that highlight the complex operating environment in the regional chemical industry. Rising natural gas prices at the beginning of 2025 significantly increased production costs, while market demand remained weak with an 8% decline in average selling prices and a 2% drop in sold quantities.
The financial burden has been further exacerbated by underperforming subsidiaries ACC and GCI, acquired during the previous board's tenure. These subsidiaries recorded combined losses of SR 30.8 million during the current period, contributing to the overall deterioration.
Capital Structure Crisis
Perhaps most concerning is the company's capital position. Accumulated losses now total SR 577.9 million, representing 85.7% of the company's capital. This breach of the critical 50% threshold triggers mandatory regulatory procedures under Saudi Companies Law Article 132.
The company's current liabilities exceed current assets by SR 338.3 million, raising serious questions about operational continuity. External auditors have issued an emphasis of matter regarding the company's ability to continue as a going concern.
Board Takes Action
In response to the crisis, CHEMANOL's Board of Directors has initiated comprehensive measures to protect shareholder interests. The board has appointed a specialized law firm to examine the legal circumstances surrounding the ACC and GCI acquisitions, with plans to pursue legal action against those responsible once a forensic investigation by Deloitte is completed.
Management expects to complete a rights issue in the second quarter of 2026, though this remains subject to regulatory approvals and market conditions. The board has also decided not to assume credit facilities of the troubled subsidiaries.
Regulatory Timeline
Under Saudi law, the company must convene an Extraordinary General Assembly by February 7, 2026, to address the solvency crisis. The board announced its capital restructuring plan on October 9, 2025, as it works to meet regulatory requirements and restore financial stability.
This case exemplifies the challenges facing regional industrial companies as they navigate volatile commodity markets, rising input costs, and the need for strategic restructuring in an increasingly competitive global environment.