Saudi corporate profits to remain under pressure in Q2: Al Rajhi Cap

Al Rajhi Capital expects Saudi corporate profits to remain under pressure in the second quarter due to the decline in commodity prices, reduced government subsidies and lower spending, the brokerage said in an earnings preview.

The petrochemical sector will continue to post sharp declines year-on-year (y-o-y) due to lower product prices. However, on a sequential basis, the sector’s profit is expected to remain relatively stable due to the recent recovery in prices, Al Rajhi Capital said.

Saudi Basic Industries Corp.’s (SABIC) Q2 profit is forecast to drop 48 percent to SAR 3.23 billion y-o-y on lower selling prices.

The cement sector will see profit declines caused by slower construction work during Ramadan and lower selling prices due to the discounts offered by competing firms.

Telecommunication companies are expected to see a harsh quarter due to the fingerprint requirements and the slower business activity in Ramadan.

Saudi Telecom Co. is expected to see a net profit decline of 13 percent to SAR 2.23 billion y-o-y.