Saudi-listed companies’ total profits tumble by 17%

Aramco

• $33.8bn total in Q4 2023
• Some non-oil sectors improve
• Banks and insurance lead way

The total profits of Saudi-listed companies fell 17 percent year on year to SAR126.8 billion ($33.8 billion) in the fourth quarter of 2023, research has found.

The drop has been attributed to the country’s economic contraction as oil production cuts continue. 

But sectors such as banks, insurance, transport and pharmaceuticals showed improvement in Q4, reflecting the growing importance of non-oil activity. The Saudi government says that in 2023, the non-oil economy accounted for 50 percent of real GDP for the first time. 

---

---

Banking – the second-largest sector, accounting for 14 percent of the total profits – rose 8 percent in the fourth quarter of 2023 to SAR17 billion. This was boosted by rising interest rates – which have surged to two-decade highs from near zero about two years ago – and greater lending raised Saudi bank profits last year. 

The Argaam research into Saudi-listed companies found that the biggest increase in profits was in insurance, which recorded a 450 percent jump to SAR675 million in Q4. Transport was up 253 percent at SAR297 million. Pharmaceuticals jumped 94 percent to SAR5 million. 

Energy, which accounts for 81 percent of the profits total, was down 18 percent at SAR10 billion, and telecommunications, which makes up nearly 3 percent, was down 6 percent at SAR3.4 billion. 

• S&P affirms Saudi credit ratings amid reform drive
• Saudi Arabia unemployment fell in Q4 2023
• Oil industry needs trillions in investment, says Opec chief

Saudi Arabia has cut oil production over the past year in line with Opec+ guidelines it pushed onto the agenda with Russia in an effort to force oil prices higher. 

Its economy contracted by nearly 1 percent in 2023 and budget deficits are forecast for the next three years, putting a strain on the country’s massive economic transformation programme. 

State oil company Aramco reported an 18 percent drop in fourth-quarter earnings and a 24 percent fall for the full year 2023, as a result of lower oil prices and volume sales. 

Saudi Electricity, which is 75 percent-owned by the sovereign Public Investment Fund, was the biggest loser in real terms. Net profit fell 964 percent year on year in the fourth quarter, and 32 percent in 2023 compared to 2022, as a result of rising financing costs and additional capital expenditure.