DOHA: Qatar recorded the highest earnings growth in first half of 2015 (H1, 15) at 13 percent in GCC, with the rest of the countries recording a decline. Fall in oil prices, strengthening US dollar and company specific issues were responsible for the poor earnings in the first half.
Earnings in Kuwait and Saudi Arabia contracted by 19 percent and 16 percent, respectively, while UAE, Bahrain and Oman also registered negative earnings growth of 2 percent, 5 percent and 7 percent, respectively.
During H1, 15, GCC corporates posted a negative 7.2 percent growth over H1, 14. Total earnings in H1, 15 came in at $34bn. The earnings were driven by strong performance from banks and real estate, noted Kuwait Financial Centre (Markaz) yesterday.
Aggregate net profits for banks came in at $16.7bn, a rise of 9 percent over H1, 14. Earnings from real estate came in at $3.7bn recording a growth of 44.5 percent (YoY). Robust growth in the earnings of banking sector, which accounts for 49 percent of earnings, could not prevent overall corporate earnings from declining by 7.2 percent (YoY) in H1, 15. Telecom sector continued its negative run from 2014, with overall profits declining by 35 percent.
Real estate and banking sectors have been the star performers in the region. Despite signs of slowing down towards the end of last year, the real estate sector had a great run in the first half of 2015. The commodities sector, which is the second largest sector in terms of net earnings, was impacted by lower oil prices. Telecom sector, the fourth largest in terms of net earnings was affected by the reduction in ARPUs (Average Revenue per User), as well as company specific losses.
Real estate boom in major markets such as UAE (Dubai & Abu Dhabi), Qatar and introduction of mortgage lending reforms in Saudi Arabia have led to significant earnings growth of the sector. Telecommunications sector’s earnings were affected by strengthening of the US dollar, the earnings restatement of Mobily and its continued dispute with Zain Saudi. Falling ARPU across the region was also a reason behind the fall in telecom earnings.
GCC corporate earnings are expected to contract by 0.3 percent in 2015 over FY14 and reach $69.7bn by the end of the year. UAE, Qatar and Bahrain earnings growth are expected to be robust at 8 percent, 6.2 percent and 6 percent, respectively, for the full year of 2015 as against 2014. Corporate earnings in other GCC countries are also expected to decline, during the same period, with earnings in Saudi declining the most at 7.9 percent. Corporate earnings in Kuwait and Oman are expected to fall moderately by 1.6 percent and 0.4 percent respectively.
