Abu Dhabi Securities Exchange (ADX). ADX listed companies reported 82.2 per cent increase in profits as Dubai-listed firms reported an increase of 23.1 per cent. Image Credit: Pankaj Sharma/Gulf News

Dubai: Earnings reported by GCC-listed companies witnessed a faster-than-expected recovery during the first quarter of 2021 according to data on corporate results reported on seven bourses.

“The recovery was led by a resumption in economic activity in the region despite controlled restrictions as Covid-19 cases remerged at the start of the year resulting in partial-lockdowns. Business sentiments have remained upbeat as a result of one of the fastest vaccine administration in the world achieved by the GCC countries,” Junaid Ansari, Head of Investment Strategy & Research at Kamco said in a note.

The overall corporate recovery was reflected in the monthly Purchasing managers’ Index (PMI), which indicates trends in manufacturing activity, for Saudi Arabia and UAE. According to HIS Markit, Saudi Arabia’s PMI in January-2021 was at 57.1, the highest since November-19 and remained elevated above the 50 mark during February-2021 and March-2021.

Similarly, the PMI for UAE also remained above 50 during the first three months of this year. A PMI of above 50 indicates growth in manufacturing activity.

GCC Q1 corporate profits
GCC Q1 corporate profits Image Credit: KAMCO Invest

Big leap

Data compiled and analysed by Kamco, a Kuwait based Investment Strategy & Research, showed, Quarterly net profits reached $40 billion during Q1-2021, up 49.2 per cent or $13.2 billion as compared to $26.8 billion reported in Q1-2020.

Earnings during the quarter also surpassed Q1- 2019 level by 4.4 per cent. The quarter on quarter growth as compared to Q4-2020 was even stronger at 59.9 per cent.

Out of the 21 sectors on the exchange, 17 sectors reported year on year as well as quarter on quarter growth in profits during Q1-2021. Moreover, the top 5 sectors in the region reported a year on year profit growth of 42 per cent with the bulk of the growth coming from the Materials sector.

On the other hand, the three sectors that reported year on year decline in profits included Consumer Services, Food & Staples Retailing and Software & Services. Companies in the Food & Staples Retailing and Software & Services sectors reported smaller profits due to a higher base in Q1-2020 that resulted in a decline in Q1-2021, whereas the decline in the Consumer Services sector was mainly led by losses reported by companies that continue to be affected by Covid-19 restrictions, including airlines and related industries.

Kuwait firms lead

Profits were up across the seven exchanges in the GCC with Kuwait’s listed stocks reporting the biggest increase of almost two fold during Q1-2021. Bahrain and Abu Dhabi were next with reported quarterly profits up 102.5 per cent and 82.2 per cent, respectively with Dubai-listed firms reporting an increase of 23.1 per cent.

The Energy sector reported the biggest profits in the region that reached $21.4 billion, up 27.5 per cent year on year and 53.8 per cent quarter on quarter. Profits for Saudi Aramco was up 23.7 per cent during Q1-2021at $21 billion.

The banking sector across GCC reported higher profits during Q1-2021 that reached $8.4 billion recording a growth of 16.2 per cent and 66 per cent quarter on quarter. The sequential growth reflected higher provision led decline in profits in Q4-2020. Out of the 64 banks in the region, 46 banks reported a growth in profits as compared to Q1-2020.