01/09/2015
Corporate profits falls by 14% which explains the drop in stocks
during the first half of 2015, the net profit of the listed companies in the stock market has plunged by nearly 8 billion riyals, which is approximately 14% less compared to the first half of last year. The net profit was 52 billion riyals in the first half of the current year, compared to 60 billion riyals in 2014.
The petrochemicals sector had the strongest effect on the market. The stocks of this sector fell sharply, losing about 5.7 billion riyals. Followed by the energy sector, which lost about 2.7 billion riyals, due to the setbacks in profits electricity compared to the exceptional profits of last year. It was followed by the telecommunications sector, which lost about 1.3 billion riyal. Etihad Etisalat «Mobily» had the most significant effect, due to the controversy in its financial statements during the current fiscal year.
On the other hand, the banking sector’s performance was good in the first half of 2015. Net revenues rose by 7%, adding 1.4 billion riyals in the first half, which recorded a net profit of 23 billion riyals, which is the highest. It was estimated at about 27% of the net profits of all companies.
In this following analysis, we will review the companies with the highest impact on profits:
- Highest corporate profit in terms of value: Despite the decline in the earnings SABIC by about 21%, it remains the highest corporate profit in terms of value. It was reported a net profit of about 10 billion riyals, which is about 19% of the net profits of companies. The second quarter has indicated an increase in profits, compared to the first quarter. Followed by the Saudi Telecom Company, which recorded a profit of up to 5 billion riyals, in spite of the slight decline of about 2%, followed by the National Bank, Al Rajhi, Samba, SABB, Banque Saudi Fransi, and AlRiyadh Bank. The total profits of these companies was about 31 billion, which is 61% of the total of corporate profits.
-highest growing companies in terms of value in the second quarter compare to the first quarter: some companies has recorded a growth in the second quarter. It was higher than the first quarter in terms of the size of profits. SABIC was in the forefront, with profits higher than the experts’ expectations. Experts expected the profits to be at 4.6 billion riyals, but the actual net profit was about 6 billion riyals. AlJazira Bank’s profit has icreased, it reported about 500 million riyals in profits, but was exceptional since it was not a profit from operations but from selling a piece of land. Al Rajhi Bank has made about 422 million riyals, which is more than what has been achieved in the first quarter. This increase was much higher than experts’ speculations, expenses were lower and net profit was higher.
-highest corporate profitability in the first half in terms of growth rate:
Bupa comes first: Bupa Insurance Company had the highest growth rate during the first half of 2015, by more than 700%. Buruj insurance company came second, with a growth rate estimated by 500%. Most of the other companies in the insurance sector has reported some growth in their profits, which is a result of rising the value of insurance premiums this year. These companies did not encounter any compensation-induced losses. Public transformation companies were amongst the highest growing companies, as well as Taiba holdings and Aljazeera Bank. This growth was not an operations revenue, but rather was the result of compensations of capital and sale of land. As for Thimar Fresh company, it has achieved its growth through an associate company, and not through the primary activity of the company. Perhaps the best growing companies in terms of increased operating income came through the National Shipping Company of Saudi Arabia. It has increased its fleet of tankers, which in turn raised the profitability rate. More profit is expected in the coming years.
