By Andy Sambidge
New report says Saudi, UAE firms to post stronger growth while Kuwait will see 5% decline
Corporate earnings in the GCC are forecast to grow by eight percent during 2012, according to a new report by Kuwait Financial Centre (Markaz).
It said Saudi Arabian firms would clock a nine percent growth to $27bn while companies in the UAE is expected to post a growth of 11 percent to $10.8bn.
Kuwait earnings are forecast to contract by five percent to $3.9bn while banks are seen accounting for 38 percent of total earnings in the region this year.
The outlook by Markaz comes from a study of over 650 companies across the GCC based on second quarter earnings.
It said the overall net earnings for the second quarter declined by one percent to $13.8bn compared to the same quarter last year.
The decline was led by Saudi Arabia and Kuwait companies whose aggregate net incomes dropped six percent and 27 percent respectively.
Bahrain also reported considerable weakness though it has a smaller share. Oman, UAE and Qatar firms net income grew 56 percent, 12 percent and eight percent respectively, the study added.
Second quarter earnings of Saudi Arabian companies totalled $6.5bn, a six percent decrease compared to the same quarter previous year.
SABIC, which reported $1.4bn in Q2 profits, saw its bottom-line decline by 35 percent due to softening of global petrochemical prices and higher raw materials costs.
Kuwait corporate earnings dropped 27 percent in Q2 to $811m. Kuwait saw its earnings recover in the first quarter of 2012 after three consecutive quarters of decline.
During Q2, UAE companies posted earnings of $3bn, a 12 percent growth compared to the same quarter last year.
Banking sector earnings declined seven percent to $1.6bn while telecom earnings grew 22 percent to $597m.
Qatar's earnings continued to grow at a stable rate of eight percent to $2.6bn compared to Q2 2011.
Oman's corporate earnings grew 56 percent in Q2 to $469m, one of the strongest showing, while profits in Bahrain dropped 29 percent to $370m.