Net profitability for Saudi firms increases to SR94.8bn

31/01/2012 07:51 AST

Profitability for the Saudi market in 2011 showed strong growth with market net income up 22 percent to SR94.8 billion from SR78.1 billion in 2010, NCB Capital, Saudi Arabia's leading wealth manager, has said in a new report. However, growth slowed significantly in Q4, 2011 with net income increasing by only 11 percent against 25 percent for the first nine months of 2011. The Q4, 2011 net income was significantly impacted by a YoY net income decline from the petrochemical sector.

Commenting on the report, Farouk Miah, head of equity research at NCB Capital, said: "The petrochemical sector accounted for 43 percent of the total market net income in 2011 (up from 38 percent in 2010) and was 38 percent higher YoY. At the same time, SABIC accounted for 31 percent of total market net income in 2011 (up from 28 percent in 2010) and saw YoY net income growth of 36 percent YoY. In addition, the banking sector reported net income growth of 17 percent in 2011 and accounted for 27 percent of total market net income in 2011, down from 28 percent in 2010.

The petrochemical sector's 2011 net income came in at SR40.8 billion, up 38 percent due to increased volumes and higher petrochemical prices. The start up of Sahara's Al-Waha facility and the full year contribution from Yansab and Sipchem's Phase II fueled volumes growth in 2011. The sector reported a Q4, 2011 net income of SR7.8 billion, down 6.7 percent due to lower selling prices.

SABIC alone accounted for 71.5 percent of the petrochemical sector's total net income in 2011 compared to 72.8 percent a year ago. SABIC's Q4, 2011 net income came in at SR5.2 billion (down 9.9 percent and 35.7 percent QoQ) as lower selling prices dented earnings, despite higher sales volumes.

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