Senior finance executives in the Middle East upbeat despite uncertainty

In Saudi Arabia, 71 percent of finance executives expected strong or modest growth this year. (Reuters)
Updated 19 June 2019

Senior finance executives in the Middle East upbeat despite uncertainty

  • Some 72 percent of those polled regionally thought they would see economic growth this year
  • The report also highlighted the core importance of next-generation technology and innovation on corporate dynamics

DUBAI: Senior finance executives in the Middle East are less optimistic about the prospects for economic growth than they were 12 months ago, but remain positive on the outlook for their companies and investments.
That was the main finding for the region of an international poll conducted for American Express, the global financial services firm, by Institutional Investor, the business information group, and presented to media and corporate clients in Dubai yesterday.
Mazin Khoury, chief executive officer for American Express in the Middle East, said financial executives were “operating in unsettled times.” Despite this, “they are concentrating on their day-to-day business but keeping an eye on the future,” he added.
Some 72 percent of those polled regionally thought they would see economic growth this year, compared with 92 percent last year, in part due to oil price fluctuations. Only 10 percent said there would be a significant contraction in growth.
In Saudi Arabia, 71 percent of finance executives expected strong or modest growth this year, roughly the same as in the UAE. Amex noted that “despite oil prices rising in early 2019, long-term global trends point to more supply and less demand.”
The poll was taken late last year, before even greater recent volatility in the global oil markets, as well as worries about global trade and faltering economic growth.
A majority of them — some 64 percent — thought that “socio-economic changes and global trade policy” would strengthen their companies’ growth prospects, with only 5 percent expecting these factors would weaken their outlook. That was broadly in keeping with global averages, Amex said.
“Expanded foreign trade will be based more on organic strategies than partnerships, the executives through, with most companies likely to set up or expand foreign operations and use online media for marketing to pursue international growth strategies,” in a sign of a more nimble approach to foreign trade in the Middle East.
The report also highlighted the core importance of next-generation technology and innovation on corporate dynamics, as well as the importance of young people under the age of 24, as both customers and employees.
Some 78 percent of respondents said they had explicit strategies to appeal to “Generation Z” consumers, who make up between 50 and 64 percent of regional populations.
The report did not include data relating to consumer spending by Amex customers. Khoury said that his business had not seen any impact from recent negative trends in economics or geopolitical factors.
“If it happens it will not affect American Express alone, but there has been no impact. It is too early to judge,” he said, referring to increased tensions in the Arabian Gulf region.
“Our customers are still calling us to book their travel, we are still engaging with corporates
and signing new corporates. They are continuing to spend,” he told Arab News.


Aramco profits fall in tough quarter, but sees partial recovery from COVID-19 impact

Updated 57 min 23 sec ago

Aramco profits fall in tough quarter, but sees partial recovery from COVID-19 impact

  • Aramco see’s “partial recovery” from pandemic impact
  • Aramco president says company remains resilient

DUBAI: Saudi Aramco, the world’s biggest oil company, reported a net income of $6.57bn for the second quarter of 2020, the period which witnessed the most volatile oil market conditions for many decades.

The result, announced to the Tadawul stock exchange in Riyadh where the shares are listed, compared with income of $24.7 bn last year.

Amin Nasser, president and chief executive, said: “Despite COVID-19 bringing the world to a standstill, Aramco kept going. We have proven our financial resilience and operational reliability, setting a record in our business operations, while at the same time taking steps to ensure the health and safety of our people.”

Aramco’s dividend - a big attraction for the investors who bought into the world’s biggest initial public offering last year - will remain as pledged, Nasser added. Cash flow in the quarter amounted to $6.106 bn.

““Strong headwinds from reduced demand and lower oil prices are reflected in our second quarter results. Yet we delivered solid earnings because of our low production costs, unique scale, agile workforce, and unrivalled financial and operational strength. This helped us deliver on our plan to maintain a second quarter dividend of $18.75 billion to be paid in the third quarter,” he said.

Aramco said the loss was “mainly reflecting the impact of lower crude oil prices and declining refining and chemicals margins, partly offset by a decrease in production royalties resulting from lower crude oil prices and a decrease in the royalty rate from 20 per cent to 15 per cent, lower income taxes and zakat as a result of lower earnings, and higher other income related to sales for gas products.”

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Sales and revenue in the period - which saw oil prices collapse on “Black Monday” in April - fell 57 per cent to $32.861 bn from the comparable period last year. 

Nasser said he was cautiously optimistic that the world economy was slowly recovering from the depths of the pandemic lockdowns.

“We are seeing a partial recovery in the energy market as countries around the world take steps to ease restrictions and reboot their economies. Meanwhile, we continue to place people’s safety first and have adapted to the new normal, implementing wide-ranging precautions to limit the spread of COVID-19 wherever we operate.

“We are determined to emerge from the pandemic stronger and will continue making progress on our long-term strategic journey, through ongoing investments in our business – which has one of the lowest upstream carbon footprints in the world,” he added.

Aramco expects capital expenditure to be at the lower end of the $25bn to $30bn range it has already indicated for this year.