Financial earnings of listed companies in the GCC bounced back in Q1 2021 due to a faster-than-expected economic recovery despite partial lockdowns where COVID-19 cases remerged, Kamo Invest said in a report.

Quarterly net profits reached $40 billion during Q1, up 49 percent or $13.2 billion compared to $26.8 billion reported in Q1-2020.

Earnings during the quarter also surpassed the comparative quarter in 2019 level by 4.4 percent.

The q-o-q growth as compared to Q4-2020 was even stronger at 60 percent. Out of the 21 sectors on the exchange, 17 sectors reported y-o-y as well as q-o-q growth in profits during Q1-2021.

Moreover, the top five sectors in the region reported a y-o-y profit growth of 42 percent.

The Energy sector reported the biggest profits in the region at $21.4 billion, up 28 percent y-o-y and 54 percent q-o-q. Profits for Saudi Aramco was up 24 percent y-o-y during Q1 at $21 billion, whereas the rest of the companies in the sector reported profits of $591 million in in the quarter under review compared to a loss of $181 million in Q1-2020.

The Banking sector also reported higher profits during the quarter at $8.4 billion; a growth of over 16 percent y-o-y and 66 percent q-o-q. The sequential growth reflected higher provisions-led decline in profits in Q4-2020. Out of the 64 banks in the region, 46 banks reported a growth in profits.

The Materials sector pivoted to gains from losses in the year-ago period. Profits stood at $3.45 billion Q1-2021 compared to $250 million loss in the year-earlier period and $1.6 billion in the past quarter. The turnaround in SABIC’s bottom-line from a loss of $0.3 billion in Q1-2020 to a profit of $1.9 billion was the biggest factor for profits jump at the sector level.

Three sectors, however, reported y-o-y decline in profits. They are Consumer Services, Food & Staples Retailing and Software & Services. Companies in the Food & Staples Retailing and Software & Services sectors reported smaller profits due to a higher base in Q1-2020. The decline in the Consumer Services sector was mainly led by losses in companies that continue to be affected by COVID-19 restrictions, including airlines and related industries. 

Top performing exchanges

In terms of countries, aggregate net profits for Saudi Arabian listed companies rose 47 percent y-o-y to $29.3 billion in Q1-2021 against $19.9 billion in the year-ago quarter.

In the UAE, the companies listed on DFM reported the smallest y-o-y increase in net profits in the quarter. Aggregate net profits reached $2 billion, registering a y-o-y increase of 23 percent or $366 million. 

Abu Dhabi ADX-listed corporates reported one of the best quarterly earnings performances in the GCC during Q1 with a y-o-y growth of over 82 percent or $1.5 billion whereas q-o-q growth was at 9.6 percent.

Boursa Kuwait-listed companies had the biggest y-o-y percentage net profit increase during Q1 with a three-fold jump. Net profits during the quarter reached $1.34 billion as compared to $0.45 billion during the year-ago quarter.

(Writing by Brinda Darasha; editing by Seban Scaria)

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© ZAWYA 2021