Public companies in the Middle East have about $54.7 billion stuck on their balance sheets, offering a significant chance to free up liquidity and boost financial resilience, as reported on Monday.
PWC’s 2025 Middle East Working Capital Study reveals that in 2024, regional companies improved net working capital (NWC) days by six days, marking a 5.6% improvement, thanks to better receivables collection and inventory management. However, only 9.4% of firms maintained these gains for three years in a row, pointing to difficulties in achieving long-term efficiency.
“In a year of geopolitical uncertainty and supply chain challenges, managing working capital effectively remains a key priority in the Middle East,” stated Mo Farzadi, Business Restructuring Services Leader at PwC Middle East. “Companies disciplined in cash conversion can unlock liquidity, strengthen resilience, and handle market pressures more effectively. Sustainable working capital improvements continue to drive growth and long-term value.”
Despite regional tensions and lower oil prices, Middle Eastern firms saw strong growth in 2024, with revenues climbing 6.3% year-on-year. Non-oil sectors led, with UAE’s non-oil revenue jumping 16.8% and Saudi Arabia’s up by 8%. Oil-based companies, however, faced revenue drops due to falling prices.
Since 2020, the region has maintained an 11.5% compounded annual growth rate, highlighting its economic strength. Confidence is high, with 90% of GCC CEOs optimistic about revenue growth in the coming year, according to PwC’s 28th Annual CEO Survey.
Mergers and acquisitions (M&A) remained strong, fueled by diversification strategies and value creation goals. PwC’s TransAct 2025 report points to M&A, including IPOs and cross-border acquisitions, as key to top-line growth.
Regional profitability improved slightly in 2024, increasing by 30 basis points after two years of decline. Cost of goods sold (COGS) as a percentage of revenue fell by 60bps, the first decline in three years, due to better sourcing and early localisation benefits. However, selling, general, and administrative (SG&A) costs rose by 20bps to 8.1%, with Saudi Arabia showing higher ratios than regional peers, suggesting room for operational transformation.
Receivables performance improved, with Days Sales Outstanding (DSO) decreasing to 81.1 days from 83.9 in 2023. Companies increasingly used structured order-to-cash processes, automation, and AI tools for better collections. Factoring receivables, especially in Saudi Arabia and the UAE, has gained popularity to manage payment delays, although PwC warns it may hide inefficiencies in internal processes.
Inventory efficiency also improved, with Days Inventory Outstanding (DIO) dropping by three days. Companies investing in supply chain visibility and planning tools saw benefits, especially amid Red Sea disruptions and broader geopolitical tensions. Localisation efforts reduced safety stock and lead times, though PwC sees more opportunities in inventory planning and demand forecasting.
While Days Payables Outstanding (DPO) stayed stable, the overall improvement in working capital metrics shows a strategic focus. The COVID-19 pandemic boosted working capital’s importance on corporate agendas. This shift is seen in the rise of performance improvement projects and using working capital in M&A transactions.
With capital costs remaining high, working capital efficiency should be viewed as a long-term capability rather than a short-term fix, PwC analysts noted. “Companies investing in sustained improvement will be better positioned to strengthen balance sheets, improve resilience, and unlock future growth opportunities,” they added.
