DOHA: Total earnings for GCC-listed companies dropped 14.7 percent y-o-y in Q2-19 to $15.8bn from $18.5bn in Q2-18. Although only three of the six GCC markets recorded a decline in Q2-19 earnings, Saudi Arabia’s 37.1 percent decrease in Q2-19 was enough to drag the whole GCC markets earnings down.
Saudi Arabia saw the biggest decline among the GCC markets with its total profits sliding $3.0bn to reach $5.1bn in Q2-19, down from $8.1bn in Q2-18. Qatari and Bahraini companies also witnessed y-o-y declines in earnings. Kuwait companies saw their Q2-19 net profits rise as compared to the corresponding quarter in the previous year, KAMCO’s ‘GCC corporate earnings report for Q2’ noted yesterday.
In terms of sectors at the GCC level, three of the top five largest sectors by market cap including the Materials Sector, the Real Estate Sector and the Capital Goods sector recorded steep double-digit declines in their Q2-19 net profits resulting in an overall decline in aggregate quarterly profits for the GCC during Q2-19. On the other hand, the Banking and Telecom sector’s 3.5 percent and 15.5 percent growth in profits during Q2-19, respectively, failed to offset the overall decline at the GCC level. Profits for the Utilities sector also witnessed a steep drop of 40 percent during the quarter. GCC earnings also declined during 1H-19 as compared to 1H-18 by almost 10 percent with total net profits reaching $32.8bn as compared to $36.4bn in 1H-18.
Oman was the best performing market with total 1H-19 earnings growth of 9 percent, while Kuwait reported a earnings growth of 4.7 percent.
The Banking sector represented 59.7 percent of the GCC earnings in Q2-19. The sector’s y-o-y Q2-19 earnings improved 3.5 percent to reach $9.4bn, up from $9.1bn in Q2-18. However, in terms of sequential growth, profits declined by 4.6 percent as compared to Q1-19. The q-o-q decline was the steepest in Saudi Arabia at 27.3 percent while Qatar, Bahrain and Omani banks reported low single digit fall in profits.
With the exception of the Saudi Banking Sector, with a profit decline of 18.5 percent yo-y to $2.7bn in Q2-19, all the other remaining five GCC Banking Sectors recorded increases in Q2-19 earnings. Profits for the top 10 banks in the GCC stood at $7.3bn or 78 percent of the total GCC banking sector profits. Telecoms reported one of the best profit improvements during Q2-19. Profits for Qatari telcos almost doubled during the quarter as compared to Q2-18.
GCC Materials Sector witnessed 70.7 percent y-o-y decline in Q2-19 net profits that reached $0.92bn down from $3.14bn, the biggest decline in Q2-19 earnings among the GCC sectors. The biggest three loss-making companies in the GCC Materials Sector were in Saudi Arabia, namely, National Industrialization Co which posted a loss of $75.4m in Q2-19, followed by Saudi Kayan and Saudi Arabian Mining with quarterly losses of $72.8bn and $65bn, respectively.
Source from: The Peninsula