MSM 30 firms’ earnings fall

29/11/2010 00:00 AST

The total income of MSM 30 companies, excluding investment holding firms, edged up by 2.3 per cent to RO1,810.34 million for the first nine months of 2010, over the same period last year.

However, the total earnings of these companies for the first nine months fell by 9.3 per cent to RO324.56 million, on the back of lower numbers from index heavyweights like Oman Telecommunications Company, Galfar Engineering and Contracting, Raysut Cement and Oman International Bank, according to a research note released Gulf Baader Capital Market.

For the third quarter alone, total income of MSM 30 companies, which constitute the general index, moved up by 1.6 per cent to RO609.06 million on a year-on-year basis. However, the corporate earnings of MSM 30 companies for the three month period slipped by 6.1 per cent to RO104.33 million, the report said.

“During the third quarter, the total income and earnings have shown a flattening trend. Overall, we saw the corporate earnings of MSM 30 companies for the first nine months showing a consolidating pattern with no major positive surprises coming in during the period,” added the report.

Referring to the performance of different sectors, the research report said that the earnings of banks were in line with the estiamte of brokerage company.

A positive surprise in the third quarter is a strong operating performance from BankMuscat.

ahlibank continues to report strong performance during the period. Bank Sohar numbers disappointed with sharp jump in non-performing assets (NPAs). Banking sector’s operating income for the first nine months grew by eight per cent on year on year, which is a positive sign. While the sector earnings grew marginally by 2.2 per cent.

Industrial sector

The financial performance of industrial sector was mixed. “Commodity players reported dismal earnings on the back of a slowdown in demand and summer impact. Engineering majors Galfar and Al Hassan reported numbers below our expectations. Industrial sector revenue for the nine month declined by 5 per cent on a year-on-year basis. While the sector earnings have fallen sharply by 16.4 per cent year on year, which is a concern,” the research report noted.

Except for Omantel, the services sector performance came out to be above the brokerage firm’s estimates. Renaissance Services reported growth across all its business segments. Shell Oman marketing has showed considerable jump in earnings. Services Sector topline has increased by 6.7 per cent for the first nine months this year on a year on year basis.

While the sector earnings have declined by 17.8 per cent owing to disappointing numbers from telecom major Omantel.

Gulf Baader expects the fourth quarter corporate earnings of MSM 30 companies to show considerable improvement on a year on year basis and a marginal growth on sequential basis. “The improvement on year on year basis would be largely attributed to the higher provisions taken by the major banks in the fourth quarter.”

Times of Oman