16 April 2013
Muscat: Corporate earnings in the six-member Gulf Cooperation Council (GCC) region continued to rise in 2012, albeit at a slower pace when compared with 2011. Overall corporate earnings grew by 4.5 per cent, year on year, to $55.4 billion in 2012, after posting strong growth in 2011. Saudi Arabia remained the largest contributor to overall GCC earnings, constituting 46 per cent in 2012, followed by the UAE and Qatar, contributing 21.2 per cent and 18.7 per cent, respectively, according to a study conducted by the Kuwait-based Global Investment House.
Oman
The study reported that corporate earnings in Oman had increased by 14.3 per cent to $1.7 billion in 2012, led by robust growth across all sectors, barring the industrial sector. The financial sector, which contributed 48.8 per cent of the Muscat Securities Market's (MSM's) 2012 earnings, witnessed a strong 26.4-per cent growth in earnings in 2012. Heavyweight Bank Muscat, representing 44.5 per cent of the sector's earnings, posted a net income of $361.7 million in 2012, up 18.4 per cent, supported by growth in operating income.
The services and insurance sector, the next largest contributor to MSM's earnings (39.6 per cent), grew by 7.6 per cent. While heavyweight Oman Telecommunications Company (OmanTel) witnessed a 4.1-per cent growth in net profit, Omani Qatari Telecommunications (Nawras) witnessed a 22.1-per cent fall in 2012 earnings. Nawras was impacted by increased operating expenses during the year, whereas OmanTel successfully increased its penetration, despite fierce competition in the market. Small players such as Al Jazeira Services, Al Batinah Hotels Co., and Oman United Insurance Co. almost doubled their profits.
The earnings of the industrial sector, on the other hand, declined by 4.2 per cent, led by a decline in earnings for National Aluminium Products and National Gas. An increase in government expenditure led to improved performance for cement majors. The earnings of Oman Cement (representing 23.5 per cent of the industrial sector's earnings) and Raysut Cement (32.9 per cent of the sector's 2012 earnings) grew by 36.8 per cent and 64.1 per cent, respectively. This growth was largely driven by robust growth in volumes.
UAE continues to lead
The United Arab Emirates continued its strong performance from 2011, rising 28.8 per cent in 2012. The United Arab Emirates' real-estate sector recovered in 2012, which boosted the earnings during the year. Meanwhile, the banking sector continued to grow, despite the tighter regulatory environment. On the other hand, Saudi Arabia's earnings growth remained flat in 2012 after recording robust growth in 2011, despite the government-driven large expenditure witnessed during the year.
The petrochemical sector, which fell by 16.8 per cent, weighed heavily on the overall market. Companies in the sector were impacted by price volatility for petrochemical products as well as weak demand. However, a strong performance by the banks and financial-services sector, which rose by 11.9 per cent, restricted the decline in overall earnings. Kuwait witnessed a 12-per cent growth in earnings, supported by the banking sector. Oman's earnings rose by 14.3 per cent as a result of buoyant performance across major sectors.
Bahrain and Qatar were the only countries to witness a decline in earnings in 2012. Bahrain was the worst performer in the GCC region, declining 34.6 per cent in 2012, owing to deterioration across most of the sectors. On the other hand, Qatar saw a marginal decline of 0.3 per cent, led by a decline in real-estate-sector earnings.
Bahrain
The Bahrain Stock Exchange's (BSE's) consolidated earnings declined by 34.6 per cent in 2012, with the industrial and services sectors (representing 29.8 per cent of the sector's 2012 earnings) declining 53.9 per cent and 15.2 per cent, respectively. The commercial banks' sector, which accounts for 61.4 per cent of BSE's earnings, rose by 7.7 per cent in 2012.
Earnings from the industrial sector, the next largest contributor to BSE's 2012 earnings (15.1 per cent), declined by 53.9 per cent to $258.1 million. This was the result of a 54.4-per cent decline in the earnings of major player Aluminium Bahrain. The decrease in the company's earnings was led by a 15.8-per cent drop in revenues and an increase in production costs from 75 per cent (as a percentage of sales) in 2011 to 85.9 per cent in 2012.
Kuwait's earnings remained buoyant
The Global report said the Kuwaiti market had witnessed steady growth in its corporate earnings in 2012, maintaining the momentum gathered since 2010. Overall earnings grew by 12 per cent in 2012. The earnings of the heavyweight banking sector grew by 1.2 per cent, with all companies reporting growth in earnings, barring Al Ahli Bank of Kuwait, which reported a decline in earnings of 40.4 per cent.
Heavyweights National Bank of Kuwait, Kuwait Finance House, and Burgan Bank registered a growth of 0.9 per cent, 9.1 per cent, and 10 per cent, respectively. The telecommunications sector, constituting 25.3 per cent of KSE's earnings, declined by 50.3 per cent to $1.1 billion from $2.3 billion in 2011. The earnings growth of Mobile Telecommunications Co, which represents 78.3 per cent of the sector's earnings, declined by 11.5 per cent, owing to the impact of exchange-rate fluctuations.
National Mobile Telecommunications Co. registered a 79.2-per cent de-growth in earnings. In the real estate, financial services, and basic materials sectors, many companies have yet to report their full-year financial results. As a result, these sectors are currently showing a decline in corporate earnings.
Qatar
Qatar Exchange's (QE's) corporate earnings fell 0.3 per cent in 2012. Consumer goods and the real-estate sector were the only losing sectors during the year, declining 9.7 per cent and 56 per cent, respectively. This offset the gains posted by heavyweight banks and financial services and the industrial sector, which grew 6.6 per cent and 10.1 per cent, respectively.
The banks and financial services sector continued its strong performance, growing by 6.6 per cent in 2012. The loan books of banks surged with increasing demand from public-sector companies as well as from real-estate and construction companies in the private sector. Growth in the sector was led by the heavyweights.
The industrial sector, representing 32.1 per cent of the QE's earnings, rose 10.1 per cent to $3.3 billion, supported by government spending.
Saudi Arabia
TASI's consolidated earnings remained flat and stood at $25.5 billion, similar to the level witnessed in 2011.This was primarily due to the 16.8-per cent decline in the earnings of petrochemical companies, which accounted for 35.4 per cent of overall earnings in 2012. The performance of petrochemical firms continues to remain pressured due to price volatility and weak demand. Saudi Basic Industries Corporation (Sabic), the leading player, reported a 15.5-per cent decline in earnings, owing to the higher cost of sales and lower price realisations.
The heavyweight banking sector, contributing nearly 30 per cent of total earnings, grew 11.9 per cent in 2012. Al Rajhi Bank, the leading lender in the kingdom, registered a 6.9-per cent increase in earnings to $2.1 billion, representing 27.5 per cent of the sector's total earnings. Strong fee income and an expanding loan book continued to support the stock.
Muscat: Corporate earnings in the six-member Gulf Cooperation Council (GCC) region continued to rise in 2012, albeit at a slower pace when compared with 2011. Overall corporate earnings grew by 4.5 per cent, year on year, to $55.4 billion in 2012, after posting strong growth in 2011. Saudi Arabia remained the largest contributor to overall GCC earnings, constituting 46 per cent in 2012, followed by the UAE and Qatar, contributing 21.2 per cent and 18.7 per cent, respectively, according to a study conducted by the Kuwait-based Global Investment House.
Oman
The study reported that corporate earnings in Oman had increased by 14.3 per cent to $1.7 billion in 2012, led by robust growth across all sectors, barring the industrial sector. The financial sector, which contributed 48.8 per cent of the Muscat Securities Market's (MSM's) 2012 earnings, witnessed a strong 26.4-per cent growth in earnings in 2012. Heavyweight Bank Muscat, representing 44.5 per cent of the sector's earnings, posted a net income of $361.7 million in 2012, up 18.4 per cent, supported by growth in operating income.
The services and insurance sector, the next largest contributor to MSM's earnings (39.6 per cent), grew by 7.6 per cent. While heavyweight Oman Telecommunications Company (OmanTel) witnessed a 4.1-per cent growth in net profit, Omani Qatari Telecommunications (Nawras) witnessed a 22.1-per cent fall in 2012 earnings. Nawras was impacted by increased operating expenses during the year, whereas OmanTel successfully increased its penetration, despite fierce competition in the market. Small players such as Al Jazeira Services, Al Batinah Hotels Co., and Oman United Insurance Co. almost doubled their profits.
The earnings of the industrial sector, on the other hand, declined by 4.2 per cent, led by a decline in earnings for National Aluminium Products and National Gas. An increase in government expenditure led to improved performance for cement majors. The earnings of Oman Cement (representing 23.5 per cent of the industrial sector's earnings) and Raysut Cement (32.9 per cent of the sector's 2012 earnings) grew by 36.8 per cent and 64.1 per cent, respectively. This growth was largely driven by robust growth in volumes.
UAE continues to lead
The United Arab Emirates continued its strong performance from 2011, rising 28.8 per cent in 2012. The United Arab Emirates' real-estate sector recovered in 2012, which boosted the earnings during the year. Meanwhile, the banking sector continued to grow, despite the tighter regulatory environment. On the other hand, Saudi Arabia's earnings growth remained flat in 2012 after recording robust growth in 2011, despite the government-driven large expenditure witnessed during the year.
The petrochemical sector, which fell by 16.8 per cent, weighed heavily on the overall market. Companies in the sector were impacted by price volatility for petrochemical products as well as weak demand. However, a strong performance by the banks and financial-services sector, which rose by 11.9 per cent, restricted the decline in overall earnings. Kuwait witnessed a 12-per cent growth in earnings, supported by the banking sector. Oman's earnings rose by 14.3 per cent as a result of buoyant performance across major sectors.
Bahrain and Qatar were the only countries to witness a decline in earnings in 2012. Bahrain was the worst performer in the GCC region, declining 34.6 per cent in 2012, owing to deterioration across most of the sectors. On the other hand, Qatar saw a marginal decline of 0.3 per cent, led by a decline in real-estate-sector earnings.
Bahrain
The Bahrain Stock Exchange's (BSE's) consolidated earnings declined by 34.6 per cent in 2012, with the industrial and services sectors (representing 29.8 per cent of the sector's 2012 earnings) declining 53.9 per cent and 15.2 per cent, respectively. The commercial banks' sector, which accounts for 61.4 per cent of BSE's earnings, rose by 7.7 per cent in 2012.
Earnings from the industrial sector, the next largest contributor to BSE's 2012 earnings (15.1 per cent), declined by 53.9 per cent to $258.1 million. This was the result of a 54.4-per cent decline in the earnings of major player Aluminium Bahrain. The decrease in the company's earnings was led by a 15.8-per cent drop in revenues and an increase in production costs from 75 per cent (as a percentage of sales) in 2011 to 85.9 per cent in 2012.
Kuwait's earnings remained buoyant
The Global report said the Kuwaiti market had witnessed steady growth in its corporate earnings in 2012, maintaining the momentum gathered since 2010. Overall earnings grew by 12 per cent in 2012. The earnings of the heavyweight banking sector grew by 1.2 per cent, with all companies reporting growth in earnings, barring Al Ahli Bank of Kuwait, which reported a decline in earnings of 40.4 per cent.
Heavyweights National Bank of Kuwait, Kuwait Finance House, and Burgan Bank registered a growth of 0.9 per cent, 9.1 per cent, and 10 per cent, respectively. The telecommunications sector, constituting 25.3 per cent of KSE's earnings, declined by 50.3 per cent to $1.1 billion from $2.3 billion in 2011. The earnings growth of Mobile Telecommunications Co, which represents 78.3 per cent of the sector's earnings, declined by 11.5 per cent, owing to the impact of exchange-rate fluctuations.
National Mobile Telecommunications Co. registered a 79.2-per cent de-growth in earnings. In the real estate, financial services, and basic materials sectors, many companies have yet to report their full-year financial results. As a result, these sectors are currently showing a decline in corporate earnings.
Qatar
Qatar Exchange's (QE's) corporate earnings fell 0.3 per cent in 2012. Consumer goods and the real-estate sector were the only losing sectors during the year, declining 9.7 per cent and 56 per cent, respectively. This offset the gains posted by heavyweight banks and financial services and the industrial sector, which grew 6.6 per cent and 10.1 per cent, respectively.
The banks and financial services sector continued its strong performance, growing by 6.6 per cent in 2012. The loan books of banks surged with increasing demand from public-sector companies as well as from real-estate and construction companies in the private sector. Growth in the sector was led by the heavyweights.
The industrial sector, representing 32.1 per cent of the QE's earnings, rose 10.1 per cent to $3.3 billion, supported by government spending.
Saudi Arabia
TASI's consolidated earnings remained flat and stood at $25.5 billion, similar to the level witnessed in 2011.This was primarily due to the 16.8-per cent decline in the earnings of petrochemical companies, which accounted for 35.4 per cent of overall earnings in 2012. The performance of petrochemical firms continues to remain pressured due to price volatility and weak demand. Saudi Basic Industries Corporation (Sabic), the leading player, reported a 15.5-per cent decline in earnings, owing to the higher cost of sales and lower price realisations.
The heavyweight banking sector, contributing nearly 30 per cent of total earnings, grew 11.9 per cent in 2012. Al Rajhi Bank, the leading lender in the kingdom, registered a 6.9-per cent increase in earnings to $2.1 billion, representing 27.5 per cent of the sector's total earnings. Strong fee income and an expanding loan book continued to support the stock.
© Times of Oman 2013
