GCC corporate earnings fall 6.1% to $52.4 billion

Dubai - A rise in income of banking sector offset this fall by 2.7%

Dragged down by weak income generation by companies in Saudi Arabia and the UAE, the GCC corporate earnings fell 6.1 per cent year on year to $52.4 billion by September, the latest study by Global Investment House said.
While Qatar is the only country to report rise in consolidated earnings, corporate earnings in Saudi Arabia dropped 12.4 per cent year on year as Abu Dhabi and Dubai posted declines of 9.3 per cent and 3.1 per cent respectively.
Oman fell 3.1 per cent, Bahrain fell 1.5 per cent and Kuwait slipped 0.9 per cent.
Although the UAE was the best-performing market in the GCC in 2014, Qatar outperformed it in first nine months. Qatar's performance was attributed to strong growth in the Real Estate sector's earnings, which accounted for 15.7 per cent of the country's consolidated earnings and added 9.7 per cent to the bourse's incremental earnings growth. "Infrastructure growth in the country was robust, led by construction developments related to the FIFA 2022 World Cup. Apart from Real Estate, the Banks & Financial Services sector fuelled growth in the bourse's consolidated earnings."
The consolidated earnings of the Dubai bourse fell 3.1 per cent, while that of the Abu Dhabi bourse declined 9.3 per cent    to $7.5 billion in nine months to September owing to a fall in the earnings of the energy, insurance, investment & financial services, and telecommunications sectors. These sectors contributed 13.4 per cent to the overall fall in the bourse's earnings, analysts at Global said.
A rise in the earnings of the banking sector partially offset this fall by 2.7 per cent. Among the nine sectors, Energy (-149.5 per cent year on year) was the top loser, followed by Insurance (-132.8 per cent), Investment & Financial Services (-70.4 per cent), and Telecommunications (-8.9 per cent). Industrial (31.0 per cent) led the gainers, followed by Services (28.5 per cent), Consumer Staples (17.1 per cent), Banks (4.7 per cent), and Real Estate (1.5 per cent).
The Banks sector was the biggest contributor to consolidated earnings (68.8 per cent), followed by the Telecommunications (21.2 per cent) and Real Estate (6.8 per cent) sectors. The Energy sector registered a loss of Dh540 million for September compared with a net profit of Dh1.092 million for the same 2014 month.
The loss was ascribed to a fall in the earnings of Abu Dhabi National Energy Co. The company reported a loss of Dh581 million for September compared with a profit of Dh620 million in September. "This setback was due to the implications of falling oil prices. Moreover, Dana Gas reported a 91.3 per cent fall in earnings for the month. The fall in the earnings of the telecommunications sector was due to 9.3 per cent decline in the earnings of Emirates Telecommunication Corp. The Insurance sector's earnings decreased as Abu Dhabi National Insurance Co reported a loss of Dh331.1mn for September 2015 vis-à-vis a Dh93.9 million profit in the same 2014 year.
The corporate earnings of the Dubai bourse fell 3.1 per cent to $5.6 billion. The fall in the earnings of the Insurance (-53.0 per cent), Investment & Financial Services (-45.4 per cent), and Real Estate & Construction (- 24.0 per cent) sectors dented the bourse's overall earnings growth. This fall was partially offset by a 26 per cent rise in the earnings of the banking sector, which contributed 10.9 per cent to the bourse's incremental earnings.
- issacjohn@khaleejtimes.com