Aggregate profit of Saudi-listed companies exc. Aramco falls 36% to SAR 28.25 bln in Q1 2023

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Tadawul-listed companies reported a SAR 145.72 billion aggregate net profit for the first quarter of 2023, a fall of 22% from SAR 186.24 billion in the year-ago period.  

This was due to the decline in Saudi Aramco Oil Co.'s (Saudi Aramco) Q1 2023 earnings by more than 17%, as well as lower earnings of petrochemical companies.  

The first-quarter results included SAR 5.87 billion one-off gains generated by Kingdom Holding Co. (KHC) from selling half of its stake in Four Seasons Holding Inc.  

Excluding KHC's one-off gains and Saudi Aramco's Q1 2023 earnings, the aggregate net earnings declined 26% year-on-year (YoY), hurt by the fall in earnings of petrochemical companies, led by Saudi Basic Industries Corp. (SABIC) and Saudi Arabian Mining Co. (Maaden) whose earnings dropped 90% and 81% YoY, respectively.   

Meanwhile, 37 companies operating in different sectors incurred losses, led by Saudi Electricity Co. (SEC) reporting a loss of SAR 1.4 billion. It was followed by Rabigh Refining and Petrochemical Co. (Petro Rabigh), Saudi Kayan Petrochemical Co. (Saudi Kayan) and Yanbu National Petrochemical Co. (Yansab), which reported losses of SAR 960 million, SAR 670 million and SAR 370 million, respectively.

 On the other hand, a total of 133 companies reported earnings in Q1 2023, of which 13 firms turned profitable, 69 logged profit growth, while 51 recorded a profit drop YoY.

*Excluding Ataa Educational Co., National Company for Learning and Education (NCLE), and Makkah Construction, which have different fiscal years, as well as the insurance sector as the period for applying IFRS 17 to insurance contract was extended, in addition to Alkhaleej Training and Saudi Cables for failing to announce their financials.

** Including KHC's SAR 5.87 bln one-off gains generated from selling half of its stake in Four Seasons Holding

On the sector level, energy firms accounted for 80.4% of Saudi companies' aggregate profit in Q1 2023, reporting an 18% profit fall YoY to SAR 117.2 billion in the three-month period. This was due to Aramco's earnings that dropped 17%, as well as Petro Rabigh's losses.

Banks took the second position, with 11.8% of the market’s aggregate profit. The sector's profit rose 17% YoY to SAR 17.25 billion, as most banks reported profit growth, driven by a rise in net special commission income and lower credit loss provisions. 

Telecommunication services came third, with earnings representing 2.8% of the market’s combined earnings in the three-month period, as the sector's earnings rose more than 21% YoY.

Materials ranked fourth, contributing 1.6% to the market’s combined earnings in the three-month period, with a decline of more than 84% YoY, hurt by the fall in the petrochemical producers' Q1 2023 earnings, led by SABIC whose profit dropped 90%. In addition, Saudi Kayan, Yansab and Saudi Industrial Investment Group (SIIG) incurred losses.

SABIC's profit decline was due to the collective fall in operating segments, especially chemicals and fertilizers, as well as the losses of Hadeed.

Meanwhile, the cement producers' Q1 2023 earnings rose 65% YoY on improved profit margins and average selling prices, limiting the materials sector's profit decline.

The utilities sector contributed to the aggregate profit decline in Q1 2023, as its companies turned to a loss of nearly SAR 1 billion, driven by Saudi Electricity which incurred a loss of SAR 1.41 billion in the three-month period.

*Excluding Ataa Educational Co., National Company for Learning and Education (NCLE), and Makkah Construction, which have different fiscal years, as well as the insurance sector as the period for applying IFRS 17 to insurance contract was extended, in addition to Alkhaleej Training and Saudi Cables for failing to announce their financials.

** Including KHC's SAR 5.87 bln one-off gains generated from selling half of its stake in Four Seasons Holding

The Saudi market's top 10 companies in terms of profitability accounted for more than 94% of the aggregate profit, as they showed positive performance in Q1 2023, excluding Aramco and SABIC Agri-Nutrients, as follows:

Saudi Electricity recorded the biggest loss of SAR 1.4 billion in Q1 2023, followed by Petro Rabigh (SAR 960 million), Saudi Kayan, Yansab and SIIG.