Listed UAE firms post higher rate of growth in profits than GCC peers

Listed companies in the UAE recorded a higher growth rate in net profits during 2022 compared to their peers in the rest of the GCC, primarily driven by earnings growth in the banking, real estate, utilities, and capital goods sectors.

Net profits for Dubai-listed companies more than doubled in 2022 to reach $14.2 billion as compared to $6.3 billion in the previous year, while the aggregate net earnings for Abu Dhabi-listed companies increased by 63.5 per cent to reach $30.5 billion as compared to $ 18.6 billion in 2021.

Net profits reported by GCC-listed companies jumped to a record high of $273.3 billion in 2022 as compared to $199 billion during 2021. The $74.2 billion surge or 37.3 per cent growth came mainly on the back of a steep jump in profits for the energy sector, mainly led by higher profits reported by Aramco ($159.1 billion profits in FY-2022 compared to $105.4 billion in 2021) as a result of higher crude oil prices and higher volumes, a report said.

The record profit jump across the CCC came as economic activity in the region got a boost post-pandemic that resulted in one of the best GDP growth rates during 2022.

Analysts at S&P Global Ratings have predicted that corporate and infrastructure companies in the GCC are on track to maintain a resilient performance in 2023 despite soaring interest rates and inflation, less-accommodating debt capital markets amid continued bleak economic growth. They expect corporate and infrastructure issuers in the region to comfortably navigate through 2023 on the back of stable earnings profiles, strong balance sheets, and healthy funding and maturity profiles. GCC corporates’ operating performance accelerated in 2022 accompanied by positive rating actions, largely thanks to improvements in the regional oil and gas-based economies, S&P said.

In the last quarter 2022, net profits for Dubai-listed companies surged of 47.5 per cent to $3.4 billion in the last quarter of from $2.3 billion in the same period a year ago, while Abu Dhabi’s listed firms witnessed a 49.4 per cent y-o-y increase in net profits during Q4-2022 to reach $7.8 billion compared with $5.2 billion during Q4-2021, an Investment Strategy & Research report by Kamco Invest said.

Top five largest sectors in terms of total net profits witnessed double-digit growth during the year. The banking sector led the way reporting total FY-2022 net earnings of $ 7.billion, up from $ 4.9 billion. Total net profits of the real estate sector jumped 72.3 per cent to $3.1 billion against $1.8 billion while aggregate net earnings for the utilities sector reached $2.4 billion, recording a 23.6 per cent jump.

In Dubai, the banking, real estate and utilities sectors accounted for the biggest share of corporate profits in Q4-2022 at 87.4 per cent with a y-o-y increase of 61.7 per cent. Total net profits for the banking sector increased by 55 per cent in Q4-2022 to reach $1.9 billion up from $ 1.2 billion in Q4-2021, primarily driven by Emirates NBD’s 89 per cent growth in Q4-2022 net earnings which reached $1.0 billion as against $547.8 million in Q4-2021. “The banks strong performance was attributed to record breaking net profits from its Islamic arm as well as growth in total income.”

Consumer services was the only sector in Dubai that reported total Q4-2022 losses, while the transportation sector witnessed the largest percentage profit decline among the eleven sectors in the exchange, Kamco Invest’s analysts Junaid Ansari and Mohamed Ali Omar wrote.

In Abu Dhabi, the capital goods sector drove the robust rise in quarterly earnings after the sector was reinforced with higher earnings by the two newly listed companies, Multiply Group and Alpha Dhabi Holding.

“The capital goods sector’s total net earnings in Q4-2022 jumped nine times to reach $2.8 billion as compared to $319.5 million in Q4-2021. Multiply Group announced Q4-2022 net profits of $2.4 billion n up from $22.9 million in Q4-2021,” the report noted.

Across the GCC, manufacturing activity, as seen from PMI figures, also showed a consistent growing trend, especially in Saudi Arabia and the UAE where the PMI remained comfortably above the growth mark while Qatar showed a slowdown only during the second half of the year. Continued lending growth by banks in the region was another indicator of higher investments in businesses during the year, Kamco Invest said.

• Business