Profits of Saudi-listed companies exc. Aramco dip to SAR 33.87 bln in Q2

Tadawul trading screen

Tadawul-listed companies reported an almost SAR 142.75 billion aggregate net profit for the second quarter of 2023, a drop of 36% from nearly SAR 221.81 billion in the year-ago period, hurt by an over 37% decline in Saudi Aramco Oil Co. (Saudi Aramco) Q2 2023 earnings and the weak performance of the petrochemical sector.  

Excluding Saudi Aramco, Q2 2023 aggregate net earnings of Tadawul-listed firms shed 29% to SAR 33.87 billion, due to a fall in financials of petrochemical companies, led by Saudi Basic Industries Corp. (SABIC) that logged an 85% year-on-year (YoY) drop in net profit for the quarter. Saudi Arabian Mining Co. (Maaden) posted a 91% YoY slump in the second-quarter financial results. 

As many as 32 Tadawul-listed companies operating in different sectors incurred losses, led by Rabigh Refining and Petrochemical Co. (Petro Rabigh) that saw losses of SAR 1.2 billion in Q2 2023.  Saudi Kayan Petrochemical Co. (Saudi Kayan) followed with losses of around SAR 390 million.

On the other hand, a total of 171 companies reported earnings in Q2 2023, of which 30 firms turned profitable, 81 logged profit growth, while 60 others recorded a YoY profit drop.

*Excluding Ataa Educational and NCLE which have different fiscal years, as well as Alkhaleej Training, Saudi Cable, Red Sea, SARCO, and Saudi Fisheries which did not disclose their results

**Includes Kingdom Holding's SAR 5.87 billion one-off earnings resulting from selling half of its stake in Four Seasons 

On sector level, energy firms accounted for 76% of Saudi companies' aggregate profit in Q2 2023, reporting a 38% YoY profit decline to SAR 108.4 billion in the three-month period. This was due to the 37% YoY fall in Saudi Aramco's earnings, as well as Petro Rabigh's losses.

Banks took the second position, with 12.1% of the market’s aggregate profit. The sector's profit rose 14% YoY to SAR 17.27 billion, as most banks reported profit growth, driven by the rise in net special commission income and lower credit loss provisions. 

Telecommunication services came third, representing 2.6% of the market’s combined earnings in the three-month period, as the sector's earnings climbed by about 11% YoY, supported by an almost collective improvement in Q2 2023 results of the industry-related companies.

The materials sector retreated to fourth place in the second quarter of this year, contributing 2.2% to the market’s combined earnings, with its profits slumping by 84% YoY, hurt by the decline in the petrochemical producers' Q2 2023 earnings. They were led by SABIC, which saw an 85% YoY profit slip, due to the weak performance of its operating segments as well as lower selling prices and sales volumes, besides Saudi Kayan’s losses.

During the same quarter, earnings of companies operating in the cement sector tumbled by 9% YoY as a result of the seasonality of operations amid the holy month of Ramadan as well as Eid Al Fitr and Eid Al Adha holidays during the second quarter of this year.

The utilities sector also contributed to the decline in the market’s aggregate profit, generating combined earnings of SAR 2.8 billion in Q2 2023, down 36% YoY, as Saudi Electricity Co.'s (SEC) profit dropped 41% YoY.

*Excluding Ataa Educational and NCLE which have different fiscal years, as well as Alkhaleej Training, Saudi Cable, Red Sea, SARCO, and Saudi Fisheries which did not disclose their results

The Saudi market's top 10 companies in terms of profitability accounted for more than 91% of the aggregate profit, although they reported profit growth in Q2 2023, except for Saudi Aramco, SABIC, Al Rajhi Bank and SEC.

*Net earnings after deducting the payment of Mudaraba coupon.

Petro Rabigh recorded the biggest loss of SAR 1.2 billion in Q2 2023, followed by Saudi Kayan (SAR 392.1 million).

In the first six months of 2023, the combined earnings dropped 29% YoY to SAR 289.34 billion.

The six-month period included Kingdom Holding's SAR 5.87 billion in one-off earnings resulting from selling half of its stake in Four Seasons.

Excluding Aramco's earnings and the one-off earnings, H1 2023 combined earnings would decline 27% YoY to SAR 63.03 billion.