Doha: The large cap sectors including energy, materials and real estate, dragged down the earnings of GCC companies in 2019. The total earnings for GCC-listed companies declined by 15.4 percent in 2019 to reach $149.3bn from $176.3bn in 2018, according to Kamco Invest.
The energy sector has seen consistent decline in profitability due to the fall in oil price that has particularly affected oil exploration and marketing companies in the region, whereas most of the oil transport and refining companies reported higher profits during the year. Profits for the energy sector were dropped by 20.3 percent to $89.2bn in 2019.
The GCC real estate sector, the fifth largest sector by market-cap, witnessed a 20.0 percent decline in yearly profits that reached $4.5bn in 2019. The decline came after a broad-based decline in profits across the key real estate markets in the GCC. The GCC materials sector witnessed a 68.6 percent yearly decline in profits in 2019 that reached $3.2bn vs $10.1bn in 2018. Out of the 78 companies in the sector in the GCC, 50 companies recorded a decline in profits during 2019. On the other hand, cement companies showed significant improvement in profits during the year.
The GCC banking sector once again outperformed other large-cap sectors in the region by reporting a 10 percent increase in net profits during 2019. This helped partially offset the overall decline in profits in the GCC. Net interest margins (NIM) remained largely flat across the GCC countries during 2019 resulting in flat NIM at the GCC level at 3.1 percent. Meanwhile, non-interest income declined in four out of the six GCC markets.
The y-o-y profit growth for the Telecom sector was marginal at 1.3 percent in 2019 reaching $7.7bn. Qatari telcos reported the biggest increase in earnings at 11 percent after both Ooredoo and Vodafone Qatar reported double-digit growth in net profits during the year. Kuwaiti telcos were next with a profit growth of 5.5 percent followed by telcos in Oman and Bahrain with profit growth of 4.7 percent and 4.3 percent, respectively.
