GCC-listed companies posted better profits in Q3 as economies emerged from lockdown

Saudi Arabian companies saw the largest quarter-on-quarter declines, while Abu Dhabi-listed companies saw the smallest declines

  
Investors speak as they monitor stocks at the Abu Dhabi Securities Exchange

Investors speak as they monitor stocks at the Abu Dhabi Securities Exchange

REUTERS/Stringer .

Earnings reported by GCC-listed companies in the third quarter remained subdued but showed improvement on the second quarter as the regional economy emerged from COVID-19 lockdowns.

Overall, company earnings were still down 34 percent year-on-year in the third quarter of 2020, with Saudi Arabian companies seeing the largest declines quarter-on-quarter and Abu Dhabi-listed companies the smallest, Kamco Invest said in a research report titled ‘The GCC Earnings Report: Q3 2020’.

Saudi Arabian company earnings fell by $10.2 billion, or 37 percent year-on-year to reach $17.4 billion during Q3-2020.

Excluding the quarterly net profit of Saudi Aramco, which declined by 44.5 percent year-on-year, aggregate profits for Saudi Arabian companies declined at a much smaller pace of 11.9 percent year-on-year, the report noted.

Companies in Dubai and Kuwait saw declines of $1.8 billion and $430.6 million, corresponding to year-on-year percentage declines of 59.2 percent and 30.4 percent respectively.

Abu Dhabi-listed companies reported the smallest quarter-on-quarter decline in earnings at 2.9 percent to reach $2.39 billion.

Of 21 sectors, 13 witnessed q-o-q growth in earnings and four reported profits up from losses in Q2-2020, the materials sector being the biggest out of these four, said a report from Kamco Invest.

Excluding Bahraini companies, the growth in net profit was almost 80 percent, or $10.9 billion, reaching $25.1 billion in the third quarter of 2020.

The biggest quarter-on-quarter growth was in the energy sector, with profits up by $4.9 billion or 72.9 percent, to reach $11.5 billion.

“The year-on-year decline in quarterly earnings for the energy sector came primarily on the back of subdued oil prices during the quarter that pushed down earnings across the board for the sector,” the report noted.

Saudi Aramco’s Q3 2020 earnings showed strong quarter-on-quarter recovery with a growth of $5 billion or 74.5 percent on the back of recovery in oil prices, it said. 

However, Aramco’s profits plunged by 44.5 percent or USD 9.5 billion year-on-year, a trend seen in 15 out of the 21 energy companies that declared earnings for Q3.

The banking sector came second, with profit growth of 66.9 percent after banks reported higher topline coupled with a decline in provisions that supported earnings.

The materials sector reported profits of $634.5 million during the quarter, after losses in the second quarter.

The insurance and real estate sectors reported the biggest quarter-on-quarter decline in earnings at 36.8 percent and 22.4 percent, respectively.

(Reporting by Imogen Lillywhite; editing by Daniel Luiz)

imogen.lillywhite@refinitiv.com

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© ZAWYA 2020

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