GCC Corporate Earnings Fall by 23%


Aggregate earnings of GCC companies continue to show a decline says the new monthly report from Kuwait Financial Centre S.A.K “Markaz”. With 58% of companies declaring results so far, the aggregate results show a negative growth of -23% for GCC as a whole for Q3 09. (Vs. Q3 08). The visibility is very poor for Kuwait with only 20% of companies reporting their Q3 earnings so far. With the extent of earnings already available till date, the annualized figures show a flat growth for 2009

However, there is an improvement on a sequential basis for Saudi Arabia. Q3 earnings for Saudi Arabia was higher by 8% on a QoQ basis (QoQ = Q3 2009 in comparison to Q2 2009), similarly Q2 was higher by 53% and Q1 was a turnaround. This is expected to impact the overall earnings direction for 2009 positively for GCC. Saudi Arabian earnings form 50% of the overall GCC earnings during normal years like 2007.

In Kuwait, there has been a marked improvement in corporate earnings mainly due to complete washout during 2008. The 31 companies for which comparable results are available show a 37% decline in earnings. The improvement is significant on a QoQ basis. For Q4 2008 companies in Kuwait posted a loss of USD 8.88 Bn. Post this, for the 9M 2009, the aggregate profits for the companies that have declared their results so far is at USD 1.99 Bn.

In Qatar, all the listed companies have declared their results for Q3 2009. The overall earnings for Qatari companies in Q3 2009 has witnessed a -17% decline on a YoY basis. In comparison to the second quarter the earnings have declined by -12%. On a nine monthly basis too, the earnings for 9M09 has witnessed a decline of 13% as compared to the previous year. This decline can be mainly attributed to the commodities sector in the country, which has witnessed a decline of 47% for 9M09 on a YoY basis. Banks have remained stable in the first nine months of the current year as compared to the same period in the previous year. The overall earnings for banks in Qatar have witnessed a decline of only -3.8%.

In UAE, 60% of the companies have reported their Q3 earnings so far. The overall earnings growth in UAE for Q309 is at -17%. For 9M09, the earnings decline is at -32%. Among the sectors, the decline can be mainly attributed to the real estate segment in the UAE with a 74% decline in earnings for 9M09 on a YoY basis. Banks in UAE also have suffered a decline of -23% on a YoY basis.

Among the companies that the announced their results so far, Sabic has posted a 79% decline in its 9M09 earnings on a YoY basis. Similarly, Industries Qatar too witnessed its net profits drop by 47%. Both these companies have been negatively impacted by the fall in commodity prices on a YoY basis. On a QoQ basis, due to the revival in commodity prices from its lows in Q408, there has been a improvement in earnings on a sequential basis.

The banks have also witnessed some stability. 81% of the listed banks have declared their results so far. The 9M09 earnings growth for these set of banks on an aggregate show a 12% drop in net income. This is as compared to a 97% drop in net income in Q408 on a YoY basis. Among the major banks that have declared their results till date, Al Rajhi and Samba has witnessed a 4% and a 3% growth in net income on a YoY basis for 9M09 respectively. In Kuwait, the National Bank of Kuwait has witnessed a 23% decline in net income for 9M09 on a YoY basis.

For more details on corporate earnings review, visit www.markaz.com/research

9M 2009 Earnings growth as compared to 9M 2008

# End #

Kuwait Financial Centre S.A.K. "Markaz", with total assets under management of over KD 950 million (USD 3.3Billion) as of September 30, 2009, was established in 1974 has become one of the leading asset management and investment banking institutions in the Arabian Gulf Region. "Markaz" was listed on the Kuwait Stock Exchange (KSE) in 1997.