Al Jazeera Capital has unveiled its forecast for the second quarter of 2024, which includes projections for 55 companies across various sectors. The report suggests a 6% rise in profits for these firms compared to the same quarter of the previous year, reaching a total of 16.1 billion riyals.
According to the forecast, 37 out of the 55 companies are anticipated to see growth in their second-quarter profits year-on-year. Leading the pack is Yansab with an expected surge of 319%, followed by Tasnee with a 160% jump, and Southern Cement at 145.7%. On the other hand, 16 companies are predicted to experience a decline in profits, with Othaim Markets facing an anticipated drop of 66%, and Americana at 51%.
The banking and telecommunications sectors within the covered companies are projected to witness profit increases of 7.6% and 9.5%, respectively. The cement sector is also expected to see a substantial growth of 26.6% in net profits compared to the previous year. Conversely, the petrochemical sector is forecasted to suffer a 30.5% decrease in net profits from the same quarter last year.
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The report also indicates potential growth in the banking sector’s net profit, bolstered by wider margins and asset growth. Ma’aden’s net profit is likely to climb by 142.6% due to improved commodity prices and increased sales volumes. Cement sector profits may be driven by higher sales prices and margins, although they might be offset by the rising costs of raw materials. Overall, the firms covered are expected to see a slight 1.1% uptick in profits from the previous quarter, propelled by the petrochemical sector’s growth, reduced raw material costs, and improved operational rates post the extensive maintenance activities in the first quarter of 2024.
For the Saudi petrochemical sector, net profits are predicted to leap by 95.2% to 1310 million riyals for Q2 2024 from 671 million riyals in Q1 2024. This growth is expected despite a projected 31% year-on-year decline, with increased product prices and lower propane and butane costs from the previous quarter by 5% and 7%, respectively. Previous quarter results were impacted by factory shutdowns and non-recurring factors.
Al Jazeera Capital further expects SABIC to be a major contributor to the sector’s profit growth, with a rebound in volumes following routine maintenance in the first quarter of 2024. Tasnee and Advanced Petrochemical are also likely to return to profitability in Q1 2024, contributing to the sector’s earnings. Nonetheless, the sector continues to face challenges such as a lack of sustained demand recovery due to higher interest rates, weak macroeconomic fundamentals, elevated shipping costs, logistical challenges from Red Sea issues, and seasonal factors affecting demand.
