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UAE corporate profits buck declining GCC trend

Country's listed companies' performance shows the success of diversification programme

Published: Wed 27 Nov 2024, 5:22 PM

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A view of the Dubai skyline. Net profits for Dubai-listed companies increased by 5.4 per cent year on year to $6.0 billion in Q3 2024. — AFP

A view of the Dubai skyline. Net profits for Dubai-listed companies increased by 5.4 per cent year on year to $6.0 billion in Q3 2024. — AFP

The UAE’s success in its economic diversification programme once again came to the fore on Wednesday, as an analysis showed that the country’s increase in corporate earnings in the third quarter bucked the wider GCC trend of declining profits.

According to Kamco Invest’s GCC Corporate Earnings Report : Q3 2024, aggregate net profits reported by companies listed on GCC exchanges declined by 3.3 per cent year on year during Q3 2024 to reach $59.6 billion as compared to $61.6 billion during Q3 2023. In contrast, listed companies in Abu Dhabi witnessed a 19.2 per cent year-on-year uptick in total net profits during Q3 2024, reaching $9.1 billion compared to $7.6 billion in Q3 2023. Net profits for Dubai-listed companies increased by 5.4 per cent year on year to $6.0 billion in Q3 2024, up from $5.7 billion in Q3 2023.

The year on year decline was mainly due to a fall in profits for the energy sector that registered a year on year fall of 18.5 per cent to reach $28.5 billion, again highlighting the strength of the UAE’s non-oil sector.

In Dubai, earnings growth during the quarter was mainly driven by banks, telecom, and real estate companies, with the three sectors accounting for 87.7 per cent of the aggregate earnings on the exchange during the quarter. It is noteworthy that out of the Dubai Stock Exchange’s 13 sectors, nine witnessed year-on-year growth in profits during Q3 2024, while the remaining four sectors, including the utilities and materials sectors, reported declines. In terms of nine-month performance, net profits increased by 14.8 per cent year on yearto reach $18.0 billion compared to $15.7 billion in the first nine months of 2023.

Total net profits for the banking sector increased by 3.2 per cent year on year in Q3 2024 to reach $2.9 billion, up from $2.8 billion in Q3 2023. Profits during the first nine months of 2024 for the sector increased by 10.4 per cent year on year to reach $9.4 billion, up from $8.5 billion in the first nine months of 2023. Four out of the seven banks that reported their Q3 2024 financials witnessed declines in their net profits during the quarter, while the remaining three banks saw year on year net earnings gains during the quarter.

Aggregate profits for the real estate sector improved 3.0 per cent during Q3 2024 to reach $1.6 billion, compared to $1.5 billion in Q3 2023. “The sector’s moderate growth in net earnings was mainly due to profits reported by Emaar Development, which recorded 9.9 per cent year on year growth to reach $563.3 million, compared to $512.5 million. The company’s positive earnings performance was attributed to robust demand in Dubai’s real estate market, consistent project execution capabilities, and sustained investor confidence,” the report, authored by Junaid Ansari, Kamco’s head of investment strategy and research, Mohamed Ali Omar, associate and Vineetha K. Yeluri, analyst, said.

In Abu Dhabi, total net profits Increased by 9.3 per cent year on year during the first nine months of 2024 to $25.2 billion, down from $23.1 billion in the first nine months of 2023. The banking sector in Abu Dhabi recorded an increase in net profits, with aggregate sector profit of $2.5 billion in Q3 2024, compared to $2.1 billion in Q3 2023, registering a year on year increase of $433.3 million or 20.6 per cent. The energy sector posted the second-largest net profits on the exchange during Q3 2024, witnessing an 18.6 per cent year-on-year total net earnings growth to reach $2.2 billion, compared with $1.9 billion in Q3 2023. The transportation and capital goods sectors were among the other key sectors reporting year on year aggregate earnings growth during Q3 2024, contributing to the overall growth in total earnings on the exchange during the period.

In the wider GCC, lower profits for the real estate and the F&B sectors further lowered the aggregate profits for GCC-listed corporates. On the other hand, healthy growth in profits for banks and the materials sector partially offset the overall decline. Banks in the region registered a year-on-year profit growth of 10.2 per cent to reach $14.9 billion while the materials sector recorded multifold growth in profits.

In terms of sector performance during the first nine months of 2024, bulk of the sectors registered higher year on year profits. However, a decline in profits for the energy sector by 9.8 per cent to reach $89.1 billion during the first nine months of 2024 more than offset the overall profit growth. Net profits for the banking sector increased by a healthy 10.7 per cent to reach $44.0 billion during the first nine months of 2024 while the materials sector registered a profit growth of 79.5 per cent or $2.3 billion to reach $5.1 billion.

Sectors like diversified financials and transportation also recorded higher profits during the first nine months of 2024 reaching $1.8 billion and $2.7 billion, respectively.



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