Saudi listed firms’ net profit soars 32% as energy, banking sectors shine

Saudi listed firms’ net profit soars 32% as energy, banking sectors shine
In terms of year-on-year performance by GCC companies, net profits continued to show growth in the third quarter of 2022. (Shutterstock)
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Updated 23 November 2022

Saudi listed firms’ net profit soars 32% as energy, banking sectors shine

Saudi listed firms’ net profit soars 32% as energy, banking sectors shine

RIYADH: Energy firms and banks helped fuel a 32 percent year-on-year rise in aggregate profits for listed companies in Saudi Arabia in the third quarter of 2022, according to a report released by Kamco Invest.

The analysis noted that net profits hit $51.9 billion in the three months to the end of September — up from $39.3 billion in the same period of 2021.

The report, however, noted that the aggregate profit of Saudi Arabian firms in the third quarter reported a decline of $7.4 billion compared to the previous quarter this year, where the total net profit stood at $59.3 billion.

Across the Gulf Cooperation Council region, listed firms witnessed a quarter-on-quarter decline of 8 percent at $76.9 billion, due to the fall in the earnings for energy and material companies.

“In terms of regions, only UAE-listed companies showed higher profits during the quarter, whereas aggregates for the rest of the GCC countries showed a quarter-on-quarter decline during the third quarter of 2022,” wrote Kamco in the report.

Companies operating in the Kingdom’s energy sector witnessed the maximum profit during the third quarter at $41.2 billion, driven by crude oil prices and volumes sold.

The report further noted that the profit of the banking institutions in Saudi Arabia increased to $4.4 billion during the third quarter, up from $3.5 billion during the same period in 2021.

In the banking sector, Al Rajhi Bank recorded a profit of $1.2 billion in the third quarter, supported by higher net financing and investment income, fees from banking services, and exchange income.

Saudi National Bank reported a 24.6 percent increase in the net profit to $1.3 billion, driven by a 16.1 percent drop in operating expenses due to a lower net impairment charge for credit losses.

Net profit of telecom companies in the Kingdom also grew by 22.2 percent year-on-year to $1.1 billion in the third quarter, while profits for the food and staples retailing sector almost tripled year-on-year to reach $281.6 million.

According to the Kamco report, Saudi Arabian firms operating in the materials, utilities, pharmaceuticals, biotechnology and life sciences, and consumer durables and apparel sectors witnessed a decline in profit during the third quarter.

In terms of year-on-year performance by GCC companies, net profits continued to show growth in the third quarter of 2022 and were up by almost a quarter to reach $70.7 billion as compared to $57.2 billion during the same period in the previous year.

“Abu Dhabi-listed companies showed the biggest y-o-y profitability improvement during the third quarter of 2022 with net profits almost doubling to $9.1 billion, reflecting both new listings as well as higher profits for the bulk of the listed companies on the Abu Dhabi exchange,” the report added.

Country breakdown

Aggregate net profits for Kuwait-listed firms witnessed a year-on-year decline of 74.0 percent in the third quarter to reach $1.5 billion compared to $5.8 billion in the same period of 2021.

According to the report, the decline in the profit of Kuwait-listed firms was mainly led by lower year-on-year profits reported by Agility, which had booked an extraordinary gain of around $3.1 billion in the third quarter of 2021 post the sale of its integrated logistics business to DSV Panalpina.

Net profits for Dubai-listed companies increased by 32.8 percent in the third quarter to reach $4.1 billion, the report added.

Total earnings for Qatari-listed companies increased by 1.7 percent over the same period to reach $3.32 billion as compared to $3.27 billion in the corresponding three months of the previous year.

Net profit of Bahrain-listed companies decreased by 44 percent year-on-year to $405.5 million after six of its 13 sectors — including its two largest sectors by market cap — posted a decrease in net profits during the quarter.

Total net profits for listed companies in Oman increased by 14 percent year-on-year to $457.6 million in the third quarter as compared to $401.4 million in the corresponding quarter in 2021.


Oil Updates — Crude dips ahead of OPEC+ meeting; Russia says price cap will not curb oil demand 

Oil Updates — Crude dips ahead of OPEC+ meeting; Russia says price cap will not curb oil demand 
Updated 04 December 2022

Oil Updates — Crude dips ahead of OPEC+ meeting; Russia says price cap will not curb oil demand 

Oil Updates — Crude dips ahead of OPEC+ meeting; Russia says price cap will not curb oil demand 

RIYADH: Oil futures slipped 1.5 percent in choppy trading on Friday ahead of a meeting of the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, on Sunday and an EU ban on Russian crude on Monday. 

Brent crude futures settled down $1.31, a 1.5 percent drop, at $85.57 per barrel. US West Texas Intermediate crude CLc1 futures fell $1.24, or 1.5 percent, to $79.98 per barrel. 

Both contracts dipped in and out of the negative territory, but notched their first weekly gains at around 2.5 percent and 5 percent, respectively, after three consecutive weeks of drops. 

Russia says price cap is dangerous 

Russia said on Saturday it would continue to find buyers for its oil, despite what it said was a “dangerous” attempt by Western governments to introduce a price cap on its oil exports. 

A coalition of Western countries led by the Group of Seven nations agreed on Friday to cap the price of Russian seaborne oil at $60 a barrel, as they aim to limit Moscow’s revenues and curb its ability to finance its invasion of Ukraine. 

Russian President Vladimir Putin and high-ranking Kremlin officials have repeatedly said that they will not supply oil to countries that implement the price cap. 

In comments published on Telegram, Russia’s embassy in the US criticized what it said was the “reshaping” of free market principles and reiterated that its oil would continue to be in demand despite the measures. 

“Steps like these will inevitably result in increasing uncertainty and imposing higher costs for raw materials’ consumers,” it said. 

“Regardless of the current flirtations with the dangerous and illegitimate instrument, we are confident that Russian oil will continue to be in demand.” 

Zelensky says level of price cap on Russian oil isn’t serious 

The $60 price cap on seaborne Russian oil agreed by G7 nations and Australia is not serious and will do little to deter Russia from waging war in Ukraine, President Volodymyr Zelensky said on Saturday. 

The EU is now set to approve the cap after the G7 and Australia struck a deal on Friday. The measure aims to reduce Russia’s income from selling oil, while preventing a spike in global prices. 

“You wouldn’t call it a serious decision to set such a limit for Russian prices, which is quite comfortable for the budget of a terrorist state,” Zelensky said in a video address. 

“It’s only a matter of time before stronger tools will have to be used anyway. It is a pity that this time will be lost.” 

Andriy Yermak, head of Zelensky’s administration, said earlier that the cap should be set at $30 “to destroy the enemy’s economy quicker.” 

Zelensky complained the world had shown weakness by setting the cap at $60, which he said would swell Russia’s budget by $100 billion a year.

“This money will ... go toward further destabilization of precisely those countries that are now trying to avoid serious decisions,” he said. 

(With input from Reuters) 


NEOM faces no obstacles to making The Line a reality as KSA has the vision: Top official     

NEOM faces no obstacles to making The Line a reality as KSA has the vision: Top official      
Updated 04 December 2022

NEOM faces no obstacles to making The Line a reality as KSA has the vision: Top official     

NEOM faces no obstacles to making The Line a reality as KSA has the vision: Top official      

RIYADH: NEOM is facing no difficulties or obstacles in materializing The Line, the 170-kilometer smart city, as Saudi Arabia is determined to make it a reality, according to a top official.   

In an exclusive interview with Arab News on the sidelines of the World Travel and Tourism Council Global Summit in Riyadh last week, Peter Fitzhardinge, head of Tourism Marketing at NEOM said that the developmental works in NEOM are progressing steadily, and the $500 billion project is becoming a reality.   

“The development is being done. NEOM is becoming a reality. I live in NEOM, and I see developments every minute of every day. You have to come to NEOM to see the future of livability in the world,” said Fitzhardinge.

Peter Fitzhardinge, head of Tourism Marketing at NEOM. (Supplied)

He added: “I have traveled over The Line. I do not think there are any obstacles for the Line, as we have the vision, will and determination. The Line will take the center stage in the vast beautiful 26,000 square kilometers.”  

According to Fitzhardinge, the 2029 Asian winter games at Trojena will showcase how NEOM will use innovation to carry out the event in a meticulous manner.   

“NEOM is all about innovation. I think now, not only we have to launch Trojena to show the vision, but we have to also showcase how we can bring Asian winter games into reality for people to come and participate in winter sports in NEOM,” he added.   

It should be noted that Trojena, which is due to be completed in 2026, is an area where winter temperatures drop below zero and year-round temperatures are generally 10 degrees cooler than the rest of the region.  

He added: “We are not talking about a shopping mall here. We are talking about beautiful high mountains, outdoors at 26,000 meters high. Trojena will be a great adventure playground for the world to come.”   

He further pointed out that NEOM will not be just about tourists, but Saudis will also play a crucial role in running and managing the tourism sector in the megacity.   

“NEOM is a place where everybody will be included. It is very much about inclusivity,” said Fitzhardinge.   

Earlier, Nadhmi Al-Nasr, CEO of NEOM, during his speech at the Summit said that the hanging stadiums within NEOM will make tourists reimagine and visualize the future.   

“In The Line, we want people to come and see how sports stadiums are built, and where they are built. The sports stadiums in NEOM are 300 meters high, loose and hanging in the air,” said Al-Nasr. 

 


Full reliance on SAF beyond reach of current aviation technology

Full reliance on SAF beyond reach of current aviation technology
Updated 04 December 2022

Full reliance on SAF beyond reach of current aviation technology

Full reliance on SAF beyond reach of current aviation technology
  • The high cost of SAF will affect its utility when compared with conventional jet fuel, according to KAPSARC

RIYADH: Although aircraft manufacturers and airlines have all aimed to increase energy efficiency over recent decades, the move to find alternatives to fossil-based fuels has been a struggle.

While the International Air Transport Association and the International Civil Aviation Organization are pushing the industry to adopt sustainable aviation fuel, the goal might be beyond the reach of current technologies, noted Riyadh-based King Abdullah Petroleum Studies and Research Center.

SAF is a term the aviation industry uses to describe nonconventional fossil-derived aviation fuel. It uses various sustainable resources, including carbon captured from the air and green hydrogen mixed with traditional jet fuel “with no changes needed to the aircraft or infrastructure,” according to Amsterdam-based SAF producer SkyNRG.

It adds that these green fuels cut emissions by 70 to 80 percent per flight.

Brian Moran, the vice president of global sustainability policy and partnerships for Boeing, explained that SAF is made from different feedstock such as biomass residue, cooking oils, or waste gases.

Brian Moran, the vice president of global sustainability policy and partnerships for Boeing.

Different pathways have been created to convert recycled carbon by combining it with hydrogen to produce a new fuel, Moran told Arab News in an earlier interview.

He added: “It’s not one silver bullet, but sustainable aviation fuel and low carbon fuels on the road to sustainable aviation fuels play a really vital role. And that’s why we’re so invested there.

“In the next 20 years, the world needs 43,000 new airplanes. So it’s on us to make sure that we continue this descend of emissions reduction that we have been on.”

High demand

IATA says the main challenge of SAF producers is meeting the airline demand for alternate fuel.

In 2021, airlines had ordered 14 billion liters of SAF, which “addresses the issue of whether airlines will buy the product,” added Willie Walsh, the director general of IATA, in an interview with CNBC.

The aviation sector has the second-highest energy demand in the transportation industry after the roads sector.

Willie Walsh, the director general of IATA.

Reports show that airlines are slowly moving to adopt SAF, with Qatar Airways and Emirates among them.

Qatar Airways has said 10 percent of its flights will use the fuel by 2030, while Emirates signed a memorandum of understanding with America’s GE Aviation in November 2021 to conduct an Emirates Boeing 777-300ER test flight using 100 percent SAF by the end of the year.

Pan-European aircraft manufacturer Airbus announced that all its aircraft are certified to fly with a mix of up to 50 percent SAF blended with kerosene. The aim is that all of its planes will be able to fly solely using SAF by 2030.

HIGHLIGHT

While the International Air Transport Association and the International Civil Aviation Organization are pushing the industry to adopt sustainable aviation fuel, the goal might be beyond the reach of current technologies, noted Riyadh-based King Abdullah Petroleum Studies and Research Center.

“I think quantity is the main issue at the moment. Governments should intensify the production of SAF. The reality is that airlines used every single drop of sustainable fuel that was available to us in 2021,” Walsh said in an interview issued by the association.

Even though about 100 million liters of SAF were used last year, according to Walsh, “that’s a very small amount compared to the total fuel required for the industry.”

Boosting supplies

Before 2021, only two companies globally produced SAF commercially: Finland-based Neste and Boston-based World Energy, according to the US Global Investors, a Texas-based investment adviser.

Other companies entering the field in 2021 and 2022 include Spain’s Repsol, France’s TotalEnergies, the UK’s BP, Phillips 66 and California-based Fulcrum BioEnergy.

IATA expects to see SAF production hit 7.9 billion liters by 2025, which would meet only around 2 percent of the industry’s fuel requirements. (Shutterstock)

Neste has a small annual capacity for 100,000 metric tons of SAF, but it claims to be on track to increase this to 1.5 million tons by the end of 2023 at its facilities in Europe and Singapore.

On the other hand, World Energy is planning to convert a refinery in Houston to a SAF plant, while Boeing is establishing a facility in Japan to begin researching and developing SAF.

In March, Riyadh-based Alfanar announced it had invested £1 billion ($1.3 billion) in a UK project which produces SAF from waste.

The Lighthouse Green Fuel project generates more than 180,000 metric tons annually in the UK, the firm said in a statement.

The cost factor

The high cost of SAF will affect its utility when compared with conventional jet fuel, according to KAPSARC. IATA estimates SAF generally costs twice or four times as much as any aviation fuel.

According to the Air Transport Action Group, this is happening in an industry that saw 1,478 airlines account for 2.1 percent of all carbon dioxide emissions and 12 percent of the transportation sector discharge in 2019.

“We are committed to supporting Saudi Arabia to succeed in open banking. And that is why we’re working the entire ecosystem, be it the fintech, banks or the regulator,” said Abdulla Al-Moayed, CEO and founder of Tarabut Gateway. (Supplied)

That year, the industry spent $186 billion on 95 billion gallons of fuel to fly its passengers worldwide.

Fossil fuel spending will remain a deciding factor for this sector for some time. Commercial aircraft, like trains and heavy-goods vehicles, cannot rely on electric engines, as they do not provide the thrust these power-hungry vehicles demand.

IATA expects to see SAF production hit 7.9 billion liters by 2025, which would meet only around 2 percent of the industry’s fuel requirements. However, by 2050, the association says production would jump to 449 billion liters or 65 percent of the sector’s needs.


Saudi pharmaceutical market size to reach $11bn by 2026

Saudi pharmaceutical market size to reach $11bn by 2026
Updated 04 December 2022

Saudi pharmaceutical market size to reach $11bn by 2026

Saudi pharmaceutical market size to reach $11bn by 2026
  • Bayer aims to keep tapping into local talent to contribute to the Saudi community

RIYADH: The Saudi pharmaceutical market is worth about $8 billion, according to Samer Lezzaiq, Bayer’s managing director for Saudi Arabia.

The market is estimated to touch $11 billion in 2026, almost as big as Egypt and the UAE combined.

“There is absolutely no doubt that the Saudi pharmaceutical market is among the largest in the Middle East,” said Lezzaiq.

“If you look into the markets, you will see that, for example, the UAE’s market is about $3 billion, while Egypt is a little bit more, it’s about $5.5 billion, so Saudi is almost as big as both Egypt and the UAE,” he added.

The German inventor of Aspirin has a 1.4 percent market share in the Kingdom, about 1 percent less than the company’s share globally.

“So our pharma market share globally is 2.4 percent. We are No. 12 in the world when it comes to pharmaceuticals. In Saudi, we have 1.4 percent; the mzarket share is lower than the global average,” he said.

Bayer’s main office in Saudi Arabia is based out of Jeddah, serving the Kingdom and neighboring Gulf countries.

With a team of 170 people, Bayer aims to keep tapping into Saudi talent to contribute to the well-being of the Saudi community.

“We have 170 employees in Saudi Arabia, almost 52 percent of our workforce is Saudi nationals,” said Samer Lezzaiq, Bayer’s managing director for Saudi Arabia

“We have 170 employees in Saudi Arabia, almost 52 percent of our workforce is Saudi nationals,” he said.

Lezzaiq said that Saudi Arabia and the UAE are leading the region in digital health. The company is utilizing digital tools to accelerate its sales in the region; it has recently closed a deal with Amazon to enhance its reach to consumers.

“Our consumer division has some dermatologically tested skin products that were launched recently. So there would be more potential to reach a larger number of consumers by partnering with third parties like Amazon. So digital today is really at the center of our strategy,” he added.

Bayer is a German company with a more than 150-year history and core competencies in healthcare and agriculture.

On March 6, 1899, Bayer AG registered the trade name Aspirin and began distributing the white powder to hospitals and clinics.


Middle East startups on a fund-raising spree

Middle East startups on a fund-raising spree
Updated 03 December 2022

Middle East startups on a fund-raising spree

Middle East startups on a fund-raising spree
  • UAE-based fintech Qashio raises $10m to fuel expansion into Saudi market

CAIRO: The UAE-based fintech startup Qashio raised $10 million in a seed funding round using equity and non-equity investments to accelerate expansion into Saudi Arabia.

Established in 2021, the company enables businesses to gain full visibility and control over their expenses through its spend management platform. In addition, it claims to be the first fintech company in the UAE to issue corporate employee cards.

“Saudi Arabia is making great efforts to align with its Vision 2030 by taking fintech-friendly approaches and bringing more fintech firms into the market. At Qashio, we are proud to be an integral part of propelling a cashless society in the UAE and now Saudi Arabia,” Armin Moradi, CEO and co-founder of Qashio, said in a statement.

The company already serves clients in the UAE and Saudi Arabia but will use its acquired funding to accelerate further customer acquisition and market presence in the Kingdom.

“This round of funding will help us expand hiring and growth into Saudi Arabia and other parts of the GCC and accelerate the execution of the product roadmap. We are excited for the days ahead,” chief product officer and co-founder Jonathan Lau said in a statement.

The round saw participation from venture capitalists One Way Ventures, MITAA, Cadorna Ventures, Sanabil 500 MENA, Nuwa Capital, Iliad Partners and Phoenix Investments.

Data is the new oil

Saudi Arabia-based data platform DataLexing raises $3 million in a seed funding round led by Sadu Capital with participation from Impact46 and other investors.

Founded in 2018 by Rayan Al-Faheid and Abdulelah Al-Ganas, the company offers organizations and individuals to acquire data without relying on technical personnel and gathering insights, apps, notifications, forms, and sheets in one place.

“The link between data and centralized reporting usually goes through different applications, platforms, data engineers, and multiple integrations. That wastes business users’ time and effort to produce a report on time and even with questionable accuracy,” Salem Washeely, managing director at Sadu Capital, said in a statement.

He further explained that DataLexing managed to bridge the gap for clients locally and globally by creating a hassle-free solution.

The company plans to utilize its funding round to expand into Gulf Cooperation countries and develop its product further.

Educating the youth

Saudi Arabia’s educational technology firm Jeel secured $1.1 million in a seed funding round led by Egypt-based venture capital firm EdVentures.

Founded in 2020 by Ahmed Sobaih, the company educates pre-schoolers through its edutainment platform, which contains learning content prepared by psychologists and educators.

EdVentures offers incubation, acceleration, and investment programs for startups to boost the ed tech sector, which hosts over 1,500 companies in the Middle East and North Africa.

Full spectrum of pharmaceuticals

Egypt-based B2B marketplace Grinta raised $8 million in a seed funding round co-led by Raed Ventures and Nclude alongside Endeavor Catalyst and 500 Global.

Established in 2021 by Mohamed Azab, Yosra Badr, Ali Youssef and Hamza Mohamed, Grinta provides pharmacies with a full range of pharmaceutical and medical products from vendors through its B2B platform.

“As we plan to expand our footprint in the main Pharma hubs on the continent, we will also enable Egyptian and regional Pharma manufacturers to further penetrate the $50 billion African market,” Azab, CEO of Grinta, said in a statement.

FASTFACTS

• Saudi Arabia’s educational technology firm Jeel secured $1.1 million in a seed funding round led by Egypt-based venture capital firm EdVentures.

• Egypt-based B2B marketplace Grinta raised $8 million in a seed funding round co-led by Raed Ventures and Nclude alongside Endeavor Catalyst and 500 Global.

The company plans to increase its market presence in Egypt and utilize its funding to enhance its tech platform and expand its team.

Since its inception, Grinta has been present in seven governates in Egypt, with over 14,000 registered pharmacies, 20,000 product offerings, and more than 100,000 delivered orders.

A Phoenix Star

UAE-based gaming platform Fenix Games secured an investment mega-round of $150 million led by Phoenix Group and Cypher Capital.

The company, founded this year, aims to boost blockchain games in the region by acquiring, investing, and creating a publishing platform of the future.

The company believes blockchain gaming is heading toward consolidation, where large corporations will acquire and invest in strong startups.

“We plan to acquire, invest, publish, and operate in select cases games and studios. We will have a few hundred million to deploy to execute our strategy,” Chris Ko, CEO and co-founder of Fenix Games, said in a statement.

He added that the company is tackling a structural gap by redefining publishing groups to leverage traditional publication but with new and innovative functionality.

Fenix Games aims to combine the skills of its team in publications and product management to provide publishing services to all game models, which include premium, free-to-play, and blockchain gaming across all platforms.

“The infrastructure, tools and support just do not exist. We believe there is an opportunity for the role of publishing to elevate its role in the gaming ecosystem,” Ko added.