A 2.63 per cent gain in Emirates NBD stock helped DFM close the week higher by 1.89 per cent, while ADX finished 0.62 per cent up.
With most of the listed firms in UAE announcing their second quarter/first-half earnings, it is interesting to see how they have performed. A quarter-on-quarter comparison will give us a better idea - an analysis of 110 listed firms for which information is available shows total revenues decline by 7 per cent from Dh91.97 billion in the first quarter to Dh85.79 billion in the second.
But profits on an aggregate basis fell by 10 per cent from Dh13.20 billion in the first quarter to Dh11.88 billion. However, from a macro perspective, UAE’s listed firms have done well given the gravity of the situation they were confronted with.
Banks witnessed a 15 per cent decline in revenues while the profit dip was limited to 6 per cent due to aggressive cost cutting efforts. A lot of banks closed their branches and reduced staff numbers to protect profit margins.
The aggregate revenue of banks declined from Dh36.99 billion from the first quarter to Dh31.59 billion, while profits fell from Dh7.03 billion to Dh6.61 billion.
Springing some surprises
Real estate companies for which information is available show aggregate revenues were down marginally from Dh14.86 billion to Dh14.82 billion in the second quarter.
Airlines, obviously the most impacted sector, had revenues crash 68 per cent - from Dh1.45 billion in the first quarter to Dh465 million. Profits of Dh130 million in the first quarter were wiped out and a total loss of Dh222 million was posted in the second. But the liquidity scenario for listed UAE airlines remain comfortable.
Listed hotel operating companies were down 69 per cent in revenues, from Dh344 million to Dh108 million. The sector plunged into a loss of Dh58 million in the second quarter from a Dh16 million profit in the first.
The agri category, which includes companies like International Holdings, was a standout performer. They saw revenues rise by 144 per cent from Dh717 million in the first quarter to Dh1.74 billion. Profits rose a whopping 592 per cent to Dh672 million from Dh97 million. In a reflection of these desperate times, life insurance and some insurance brokers saw a rise in business.
It is always a tough call to give a forecast at this point of time - but by fourth quarter, expect UAE businesses to see a sharp recovery.
- Vijay Valecha is Chief Investment Officer at Century Financial.