Major Omani firms expected to post fall in profit

07/10/2015 07:49 AST

Major Omani firms, which constitute the MSM30 Index, are likely to post a fall in net earnings, but revenues will grow marginally for the first three quarters of this year, as compared to the same period last year.

Net earnings of MSM index firms, including investment holding companies, are estimated at OMR487.72 million for the nine-month period, a decline of 4.5 per cent on year-on-year basis, the Gulf Baader Capital Markets said in a research note released on Tuesday. However, revenues of these companies are expected to edge up 0.8 per cent to OMR2.75 billion.

The fall in net earnings was partly due to a sluggish trend on the Muscat Securities Market (MSM), which affected earnings of investment holding firms. The decline in share prices on the local bourse has affected the portfolio investment income of all companies.

Gulf Baader study noted that the net earnings of MSM 30 firms for the third quarter alone is anticipated at OMR159.2 million, a fall of 7.8 per cent on year-on-year basis. Also, the third quarter revenue of these firms is estimated at OMR908.3 million, a fall of 1.1 per cent on year-on-year.

The report also noted that the banking sector is likely to report a relatively stable performance in the third quarter amid credit growth, maintenance of margins and also estimated low cost of risk. The banking sector earnings for the third quarter of 2015 is estimated to increase by 4.2 per cent on year-on-year basis, but will decline by 5.4 per cent on a quarter-on-quarter basis to OMR82.9 million.

In the second quarter of this year, Oman’s banking sector credit grew by OMR576 million in absolute terms, indicating a strong growth of 3 per cent on a quarter-on-quarter basis.

“The equity markets in the region witnessed a worst performance during the quarter and this is likely to impact the earnings of investment holding companies in a significant way,” added the report. Investment holding firms are anticipated to report a significant fall in revenue for the third quarter to the extent of 9.3 per cent on a year on year basis.

As far as industrial sector is concerned, the revenue for the third quarter is expected to decline by 11.9 per cent on a year-on-year basis amid expectation of poor performance from construction and cement players.

Times of Oman