#Saudi Q2 earnings preview: SABIC to post $1.76bln net profit; STC at $750mln | ZAWYA MENA Edition

Saudi Q2 earnings preview: SABIC to post $1.76bln net profit; STC at $750mln | ZAWYA MENA Edition

Saudi Basic Industries Corporation (SABIC) is forecast to make a second quarter net profit of 6.63 billion Saudi riyals ($1.76 billion), on higher product prices and sales volumes, said Al Rajhi Capital (ARC) in a preview of financial results for Saudi equities.

NCB Capital (NCBC) has forecast 6.41 billion riyals Q2 net profit for SABIC. For the same quarter in 2020, the petrochemicals giant made a net loss of 2.22 billion riyals.

In its Q2 2021 earnings preview, Al Rajhi Capital said all petrochemical companies under its coverage are likely to post healthy earnings growth in Q2, helped by higher sales volume and increased product spreads.

SABIC affiliate, Yanbu National Petrochemical Company (Yansab) is projected to make 469 million riyals, compared to 45 million riyals net profit in the year-ago period. NCB Capital has a higher forecast of 641 million riyals for Q2.

Saudi Telecom, the Kingdom’s largest telecom operator, is expected to post net profit of 2.82 billion riyals, according to Al Rajhi Capital. “We expect STC's performance to remain stable with top-line and bottom-line rising 4.0 percent y-o-y and 3.6 percent, respectively,” the investment bank said.

According to NCB Capital, Zain KSA is forecast to make 41 million riyals, 30 percent lower y-o-y. ARC has forecast 43 million riyals, 26 percent lower y-o-y.

“We expect Zain KSA to remain under pressure on annual basis due to higher costs, offsetting healthy top-line growth,” it said.

In the food sector, Almarai Q2 is forecast at 621 million riyals and 579 million riyals by ARC and NCBC respectively. “Rising input costs to impact the gross margins but deleveraging to support overall net margins,” ARC said. Almarai made a net profit of 619 million riyals in Q2-2020.

Savola is likely to make a Q2 profit of 225 million riyals, according to ARC and 237 million riyals by NCBC. This compares with 410 million riyals Savola posted in the year-ago period.

“Top-line to remain flattish due to high base impact last year. Gross margins of food business could dilute slightly due to volatility in agro-commodity prices,” said ARC.

Among retailers, Jarir Marketing Co. is seen posting a net profit of 222 million riyals by NCBC and 225 million riyals by ARC, compared to 208 million it made in Q2, 2020.
Positive on healthcare

Within the healthcare sector, the Q2 2021 results are likely to remain positive. ARC said: “Overall, we expect revenue of healthcare companies under our coverage to grow by 41 percent year-on-year (y-o-y), while net profit is expected to grow by 66 percent y-o-y, reflecting growth in revenue and improvement in operating efficiency.”

Mouwasat’s Q2 will come in at 166 million riyals according to the brokerage, while NCBC has pencilled in 144 million riyals.

Meanwhile, cement companies’ results are also likely to be strong during the quarter, aided by growth in volumes on a y-o-y basis.

ARC estimates Arabian Cement to make 37 million riyals compared with 8 million in the year-ago period.; Saudi Cement will come in 4 percent higher at 79 million riyals, and Yamama Cement at 50 million riyals, up nearly 5 percent y-o-y.