Weighed by petrochemicals and industrials, the aggregate earnings of GCC companies are projected to decline for the first quarter of 2019. Qatar banks are expected to report flattish earnings growth as strong balance sheet performance gets offset by higher provisioning charges and lower non-interest income, according to SICO Research.
On an aggregate level, the SICO forecast that the earnings of petrochemicals to decline by 11 percent year on year, led by lower product prices. Average petrochemical product prices for a basket of major products declined 16 percent year-on-year, and 8 percent quarter-on-quarters during the first quarter of this year. Feed stock prices declined as well as Naptha plunged 10 percent year on year and 7 percent on quarter-on-quarter.
Spot prices for petrochemicals during March exhibited a downtrend year-on-year. The year-on-year contraction in commodity prices will drive the earnings of industrials sector lower. The core earnings of the real estate sector is expected to be weak year-on-year on weak mall rental/hospitality segment performance. The SICO analysts projected another muted quarter for consumers sector despite modest revenue growth of 5 percent YoY. Cost pressures are expected to affect earnings.
