Tadawul Q3 earnings indicate strong growth in non-oil sectors

Emphasizing the Kingdom’s drive for economic diversification, banking, transportation, telecommunication services, and healthcare and equipment services all reported increased profits over the three months to the end of September. File
Emphasizing the Kingdom’s drive for economic diversification, banking, transportation, telecommunication services, and healthcare and equipment services all reported increased profits over the three months to the end of September. File
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Updated 19 November 2023
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Tadawul Q3 earnings indicate strong growth in non-oil sectors

Tadawul Q3 earnings indicate strong growth in non-oil sectors
  • Kingdom’s banking industry registered net income totaling SR17.65 billion

RIYADH: Tadawul All Share Index earnings data for the third quarter of 2023 revealed profit growth in non-oil sectors when compared to the corresponding period last year, according to data compiled by Arab News.

Emphasizing the Kingdom’s drive for economic diversification, banking, transportation, telecommunication services, and healthcare and equipment services all reported increased profits over the three months to the end of September.

The primary stock market index of Saudi Exchange employs a sophisticated methodology to assign weights to each sector within the index.

Even though the energy sector claims the highest market capitalization, primarily influenced by Aramco with a substantial SR8.47 trillion ($2.26 trillion) market cap, it does not command the highest weight. This is due to the capped indices calculation methodology, with the banks sector surpassing it in terms of weight.

This methodology is used to prevent any single security from having a dominating influence on an index, and it is part of the Financial Sector Development Program’s key initiative under the Kingdom’s Vision 2030 to enhance the exchange’s product offering.

Looking at the net income by sector for the third quarter, as per data from Bloomberg and analyzed by Arab News, the energy sector emerged as the leader with SR122.82 billion. 

HIGHLIGHTS

  • Looking at the net income by sector for the third quarter the energy sector emerged as the leader with SR122.82 billion. 
  • The telecommunication services sector disclosed the third-highest net income across all sectors, reaching SR5.75 billion.
  • The transportation sector experienced the highest growth rate, surging by 169 percent to SR223 million in net income.
  • The healthcare equipment and services sector emerged as a promising industry, registering a positive growth of 38 percent.
  • The Kingdom is committed to expanding digital health usage, involving a $1.5 billion investment in health information technology.

However, this figure indicates a 21 percent decline compared to the same quarter of the previous year, primarily attributed to diminished oil prices and a reduction in sales volumes.

Aramco, being the largest entity in this sector, reported a net profit of SR123.53 billion during the same period, indicating a 21 percent decrease from the previous year.

The decline in growth can be attributed to the Kingdom’s commitment to reduce oil output by 500,000 barrels per day, initially announced in April and extended until December 2024. 

Additionally, an extra cut of 1 million bpd, implemented in July and set to persist until December 2023, further contributed to this decrease.

The banking industry registered the second-highest net income among the indexed sectors, totaling SR17.65 billion. This represents an 8.3 percent growth compared to the corresponding period last year.

Considering the inclusion of sukuk and treasury bonds costs, Al Rajhi Bank recorded the highest net income among all banks at SR3.9 billion, but faced an 8 percent decline in this period.

Conversely, Alinma Bank showcased the highest growth, achieving a net income of SR1.33 billion, indicating a 34 percent increase from the third quarter of 2022.

The telecommunication services sector disclosed the third-highest net income across all sectors, reaching SR5.75 billion, reflecting a 43 percent growth in this period. This notable increase can be largely attributed to the performance of Saudi Telecom Co., which experienced a 38 percent growth, culminating in a total net income of SR4.89 billion in the third quarter of this year.

Zain KSA, the Mobile Telecommunications Company Saudi Arabia, experienced growth of 234 percent, reaching SR285 million during this period. This substantial increase is attributed primarily to the expansion in business-to-business activities, the uptake of 5G services, digital packages, and wholesale services.

Additionally, the growth of Tamam, a Shariah-compliant micro-lending service provider based in Saudi Arabia and a subsidiary of Zain, played a significant role in this positive financial performance.

The “Vision 2030” initiative recognizes the pivotal role of the telecom industry in enhancing living standards and driving economic growth. It aims to promote competition, elevate service standards, and increase the sector’s contribution to gross domestic product.

The robust performance of this sector is attributed to increasing subscriptions, the expansion of digital banking in the Kingdom, and diversification of services.

Significantly, the telecommunications sector witnessed strong growth during the Hajj season, capitalizing on a notable surge in its customer base.

During this period, the transportation sector experienced the highest growth rate, surging by 169 percent to SR223 million in net income.

United International Transportations Co. led this sector with the highest share, reporting a net income of SR71 million, marking a 12 percent increase from the same quarter last year.

The notable growth in this sector is primarily attributed to the strong performances of Saudi Public Transport and Saudi Ground Services Companies, which reported net incomes of SR20.2 million and SR59.9 million, respectively.

According to the state media, the Ministry of Transport and Logistic Services is pivotal to Saudi Vision 2030 through its National Transport and Logistics Strategy launched in mid-2021.

Aimed at enhancing global logistics standing and fostering economic diversification, the strategy focuses on initiatives like global logistical platforms, improved port infrastructure, and increased cross-border trade. 

The goal is to elevate the transport sector’s GDP contribution from 6 percent to 10 percent and secure top global rankings in logistical performance, cross-border trade, and road network connectivity.

The healthcare equipment and services sector emerged as a promising industry, registering a positive growth of 38 percent during this period and accumulating a total net income of approximately SR966 million.

Dr. Sulaiman Al Habib Medical Services Group claimed the highest share in the healthcare equipment and services sector, reporting a net income of SR544.76 million, reflecting a 30 percent growth during this timeframe.

According to the International Trade Administration, Saudi Arabia aims to invest over $65 billion in healthcare infrastructure as part of Vision 2030, with a focus on increasing the private sector’s contribution from 40 percent to 65 percent.

The plan includes the privatization of 290 hospitals and 2,300 primary health centers. To enhance accessibility, the Saudi Ministry of Health plans to establish “health clusters” serving around 1 million people each.

Additionally, the Kingdom is committed to expanding digital health usage, involving a $1.5 billion investment in health information technology and increased adoption of telemedicine.


Germany’s WIKA opens new plant in Dammam

Germany’s WIKA opens new plant in Dammam
Updated 51 min 46 sec ago
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Germany’s WIKA opens new plant in Dammam

Germany’s WIKA opens new plant in Dammam

DAMMAM: The vast industrial city, known as MODON, situated in the industrial patch of land lined by warehouses and factories in Dammam has a new factory in town. 

The well-established German WIKA group inaugurated their newest plant on Feb. 29, with the local state-of-the-art production facilities meant to streamline every step of their journey forward.

“This is a symbol of our bilateral relationship which consists of a myriad of business, economic, cultural and political relations,” German Ambassador to the Kingdom Michael Kindsgrab said to the crowd.

Kindsgrab, who flew in for the occasion, pointed out how this new plant served as an example of the ample opportunities recently made available to German companies in the Kingdom and would help to further deepen the close relationship between Germany and Saudi Arabia. 

He cited this as his first visit to the Eastern Province and seemed to immensely delight in the cultural offerings on stage when local performers welcomed him — and WIKA — in traditional folk song and dance in between the various speeches.

The launch also brought together Germans and Saudis, as well as the diverse staff at WIKA.

“On behalf of Saudi Aramco, I would like to extend my warm thanks, appreciation and congratulations to WIKA for inaugurating WIKA Saudi Arabia,”  Fawaz Al-Sahan, manager of process automation system division at Saudi Aramco said, adding: “Today I’m honored to celebrate this success with you because we believe that localization has great benefits to both of our companies.

“In terms of scope, I believe that this is the largest instrumentation facility in the Kingdom. I trust this facility will serve as a WIKA hub for the Middle East.”

Alexander Wiegand, chairman and CEO of WIKA, also spoke to the crowd and offered his heartfelt gratitude to those who helped his family-owned company excel over the decades. He lovingly recalled the days when his mother was in charge and how this new facility in Dammam would be an extension of the WIKA family that is celebrating 78 years of operation in 2024.

“WIKA’s expansion in Saudi Arabia will create more than 100 new jobs over the next few years, it thus makes an important contribution to the local job market. In the new plant, German top technology is implemented by a qualified team with in-depth knowledge of the local market. This ensures that customers are supplied with high-quality instrumentation solutions tailored to their specific needs,” Wiegand said.

The factory covers a total area of 3,000 sq. m. Supplied

The new factory, with the logo colors of orange and blue, aims to enable WIKA to serve customers in Saudi Arabia, and the region at large, even more extensively. 

In the future, products for measuring pressure, temperature, level and flow will be manufactured locally on a total area of 3,000 sq. m. This would include diaphragm seals, instrumentation valves and thermometer thermowells for connecting measuring instruments to critical processes. The range of these services will be further expanded.

WIKA, as it was noted at the ceremony, sees itself as a partner in Saudi Arabia’s economic development, especially in the area of expanding economic sectors alongside oil and gas and diversifying beyond it. The group of companies has been present with sales subsidiaries in the Kingdom for over 20 years with about 12,000 employees worldwide, and counting.

In keeping with the Saudi Vision 2030 and the Saudi Made initiative, the launch also had its eye to the future.

“We are not thinking in quarters, we are thinking in decades,” Wiegand concluded.


Arab finance ministers discuss multilateralism, economic development at G20 meeting in Brazil

Arab finance ministers discuss multilateralism, economic development at G20 meeting in Brazil
Updated 01 March 2024
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Arab finance ministers discuss multilateralism, economic development at G20 meeting in Brazil

Arab finance ministers discuss multilateralism, economic development at G20 meeting in Brazil
  • Egypt, UAE attended as guests alongside Saudi Arabia, the only Arab G20 member
  • Saudi minister: Fair trade practices must be promoted ‘to enhance economic opportunities for developing countries’

SAO PAULO: The meeting of G20 finance ministers and central bank governors that took place in Brazil on Feb. 28-29 could not be concluded with a joint statement as there was no consensus over the conflicts in Ukraine and Gaza.

But many of the leaders who attended shared similar concerns regarding the topics suggested as priorities by Brazil, which is the current president of the forum, especially reducing inequality and building multilateral cooperation to address the most pressing global issues such as sustainable development and financial stability.

Three Arab nations took part in the meeting. Besides Saudi Arabia, which is the only Arab member of the G20, Egypt and the UAE attended as guests. They manifested concurrent views regarding the central themes of the forum.

Finance Minister Mohammed Al-Jadaan, who headed the Saudi delegation along with Saudi Central Bank Gov. Ayman Al-Sayari, affirmed during one of the event’s sessions that “addressing debt vulnerabilities in low-income countries cannot happen without multilateral cooperation from all stakeholders, including creditors, debtors, international financial institutions, and the private sector,” the ministry’s media center reported.

Al-Jadaan added that fair trade practices must be promoted “in order to enhance economic opportunities for developing countries.”

Regarding low-income nations’ debt, he said implementation of the G20 Common Framework, an initiative launched a few years ago to support poor countries with unsustainable debt, must go on.

Mohamed Hadi Al-Hussaini, the UAE’s minister for financial affairs, expressed his country’s commitment to reducing inequalities through financial inclusion, Emirates News Agency reported.

He cited the Financial Infrastructure Transformation Programme, launched in 2023 with the goal of speeding up the digital transition in the financial sector.

The initiative shares the same principles as the G20-supported Global Partnership for Financial Inclusion.

Al-Hussaini said innovative instruments may have a relevant role in promoting development, mentioning green bonds and sukuk, a Shariah-compliant bond used in Islamic finance.

He also addressed the UAE’s efforts regarding energy transition and combating climate change.

The Emirati government has been helping vulnerable nations enhance their climate resilience. The UAE pledged $200 million to the Resilience Sustainability Trust in December 2023.

Al-Hussaini said the UAE decided to prioritize multilateral cooperation during the 13th World Trade Organization Ministerial Conference, which was held in Abu Dhabi on Feb. 26-29 and discussed new models for global trade.

Egyptian Finance Minister Mohamed Maait emphasized in his speech that developing nations have been impacted by challenging situations in recent months, something that affects their budgets and their ability to meet their citizens’ needs amid growing inflation crises, Ahram Online reported.

He said international cooperation is fundamental to support countries that are struggling to maintain their efforts for social protection.

He added that Egypt gained great experience in relief programs in recent years. During the COVID-19 pandemic, the country increased its support programs in order to assist vulnerable social segments at a time of economic hardship and high inflation. Any reform needs social programs if the goal is to obtain success, he stressed.

Al-Jadaan had bilateral meetings with Maait, Ilan Goldfajn, who heads the Inter American Development Bank, the French delegation and US Treasury Secretary Janet Yellen. Al-Sayari met with his Turkish counterpart.

According to a statement released by the US Treasury Department, Al-Jadaan and Yellen discussed the Saudi economy, “the progress of its reform program” and the need to “work together effectively in both bilateral and multilateral settings.”

Al-Hussaini met with the finance ministers of South Africa and Germany, as well as the executive president of the Development Bank of Latin America and the Caribbean.


Oil Updates – crude rises, markets await OPEC+ decision amid mixed demand drivers

Oil Updates – crude rises, markets await OPEC+ decision amid mixed demand drivers
Updated 01 March 2024
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Oil Updates – crude rises, markets await OPEC+ decision amid mixed demand drivers

Oil Updates – crude rises, markets await OPEC+ decision amid mixed demand drivers

SINGAPORE: Oil prices edged up on Friday and were set to end the week modestly higher as markets awaited an OPEC+ decision on supply agreements for the second quarter amid differing demand indicators for key consumers US and China, according to Reuters.

Brent futures for May climbed 31 cents, or 0.38 percent, to $82.22 a barrel by 9:45 a.m. Saudi time, while US West Texas Intermediate for April rose 24 cents, or 0.31 percent, to $78.50.

WTI is on track for at least a 2.5 percent increase this week, while Brent is holding near last week’s settlement price. Brent has hovered comfortably above the $80 mark for three weeks.

“Brent crude prices continued to trade sideways this week ... Brent at $83/bbl has shown recent strength although fundamentals remain tilted to oversupply,” said BMI analysts in a client note.

“Expectations of a continuation of OPEC+ production cuts into Q224 is also weighing on sentiment as soft demand is expected to persist ... However, timespreads for Brent futures contracts have widened. The move to stronger backwardation (market structure) will be supportive of a more bullish stance for prices as markets are pricing in tightening in the months ahead,” the analysts added.

A Reuters survey showed the Organization of the Petroleum Exporting Countries pumped 26.42 million barrels per day this month, up 90,000 bpd from January. Libyan output rose month-on-month by 150,000 bpd.

A decision on extending the cuts is expected in the first week of March, sources have said, with individual countries expected to announce their decisions.

Increasing possibilities of OPEC+ continuing with the supply cuts beyond the first quarter, potentially till the end of 2024, will likely keep oil prices above $80 a barrel, said DBS Bank energy sector team lead Suvro Sarkar.

Strong expectations of Saudi Arabia keeping term prices of crude it sells to Asian customers little changed in April from March levels also underpinned the market.

Supporting prices, the Federal Reserve’s preferred inflation gauge, the US personal consumption expenditures index, showed January inflation in line with economists’ expectations, reinforcing market bets for a June interest rate cut. This in turn could lower consumer costs and spur fuel buying activity.

However, a mixed bag of February purchasing managers’ index data from China, the world’s top oil consumer, capped price gains.

China’s manufacturing activity in February contracted for a fifth straight month, an official factory survey showed on Friday, raising pressure on Beijing policymakers to roll out further stimulus measures as factory owners struggle for orders.

“Demand side we concur that 2Q will have hiccups and we are projecting Brent to average lower in 2Q24 compared to 1Q24, before rebounding in 2H24 on the back of the potential rate cut scenario, which should boost fund flows toward riskier assets,” said DBS Bank’s Sarkar. 


Inter-Arab trade at $700bn: Union of Arab Chambers

Inter-Arab trade at $700bn: Union of Arab Chambers
Updated 29 February 2024
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Inter-Arab trade at $700bn: Union of Arab Chambers

Inter-Arab trade at $700bn: Union of Arab Chambers
  • Secretary-general attends World Trade Organization Ministerial Conference in Abu Dhabi
  • ‘The Arab region’s presence in such events aids in shaping policies for freer global trade’

SAO PAULO: Inter-Arab trade stands at $700 billion, constituting 10-11 percent of global trade, the secretary-general of the Union of Arab Chambers said on Thursday during the 13th World Trade Organization Ministerial Conference in Abu Dhabi.

In an interview with Emirates News Agency on the sidelines of the event, Khaled Hanafy highlighted the potential for increased trade, expanded business opportunities, job creation and economic growth across the Arab world through standardization, improved logistics and private sector engagement.

The UAE’s strategic positioning and robust infrastructure make it a preferred hub for international businesses seeking access to international markets, Hanafy said.

Its hosting of prestigious events such as COP28 and the WTO Ministerial Conference underscores its global leadership, communication prowess and influence in international forums, he added.

“The Arab region’s presence in such events aids in shaping policies for freer global trade,” Hanafy said, adding that the conference strengthens the UAC’s position as a representative of the Arab private sector within the WTO, potentially leading to observer status in key technical committees.

This, he said, would empower the UAC to exert greater influence on decisions shaping international trade flows.

The Arab world’s private sector contributes over 75 percent of the region’s gross domestic product, roughly equivalent to $3 trillion. This sector also plays a vital role in employment generation.

Hanafy emphasized the need for even greater private sector involvement in trade to foster business growth and achieve sustainable development across Arab nations.

He championed the UAC’s role in fostering trade cooperation within the Arab world, encompassing both commercial and investment activities.

Hanafy also advocated for the establishment of the Arab Common Market, outlining essential principles for achieving economic unity across the region.

This was the official debut of the Arab private sector at a WTO Ministerial Conference.

With unprecedented access granted to businesses at the event, representatives from regional chambers of commerce seized the opportunity to voice their concerns and aspirations.

Hanafy emphasized the significance of this inclusion at a roundtable event on the sidelines, saying: “This is the first time the Arab private sector is welcomed. The Arab private sector must be here.

“This is a great opportunity. There’s an objective: We want to see the Arab private sector have a larger role.”

Promoting economic cooperation and integration across the Arab world, the UAC unites chambers of commerce, industry and agriculture from the 22 Arab League member states.

It supports governmental and civil society initiatives to strengthen regional economic ties in commerce, industry, agriculture, finance, investment and services.


Saudi Arabia’s industrial sector focussing on small investors, minister says

Saudi Minister of Industry and Mineral Resources Bandar bin Ibrahim AlKhorayef. (@BAlkhorayef)
Saudi Minister of Industry and Mineral Resources Bandar bin Ibrahim AlKhorayef. (@BAlkhorayef)
Updated 29 February 2024
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Saudi Arabia’s industrial sector focussing on small investors, minister says

Saudi Minister of Industry and Mineral Resources Bandar bin Ibrahim AlKhorayef. (@BAlkhorayef)
  • AlKhorayef said that the ministry has a financing program with simple conditions for small investors and entrepreneurs

RIYADH: Saudi Arabia’s industrial sector has recently focused on small investors, the Kingdom’s Minister of Industry and Mineral Resources Bandar bin Ibrahim AlKhorayef has said.

Speaking to Al-Ekhbariya TV, the minister said that the ministry has a financing program with simple conditions for small investors and entrepreneurs.

The minister indicated that the business model of industrial cities, like the MODON oasis in Al-Ahsa, created a new opportunity for a certain type of investor and industry.

He added that most of the spaces in the industrial cities will be made up of ready-built factories, as this will largely reduce the financial burden on the investor, shorten the construction period, and facilitate obtaining the necessary licenses.