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Saudi Private Sector Activity Continues to Grow in November as New Orders Rise

Manufacturers are very optimistic about the next 12 months as they expect a favorable business climate. (SPA)
Manufacturers are very optimistic about the next 12 months as they expect a favorable business climate. (SPA)
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Saudi Private Sector Activity Continues to Grow in November as New Orders Rise

Manufacturers are very optimistic about the next 12 months as they expect a favorable business climate. (SPA)
Manufacturers are very optimistic about the next 12 months as they expect a favorable business climate. (SPA)

Saudi Arabia’s non-oil private sector continued its rapid growth during November, driven by the rise of new orders to the highest level in 5 months, according to the Riyad Bank Purchasing Managers’ Index.

The seasonally adjusted Riyad Bank Purchasing Managers' Index slowed to 57.5 in November, from 58.4 in October, but remained well above the 50 mark signaling growth.

According to the report issued by the bank in cooperation with Standard & Poor’s, the index continued to indicate a rapid expansion in the non-oil private sector during the month of November, despite evidence indicating an acceleration of price pressures to their highest levels in nearly a year and a half.

The report added that the rise in raw material prices led to a renewed increase in companies’ sales prices, but demand rates remained strong and new business flows rose at the highest rate since June, with companies acquiring new customers and increasing investment spending.

Naif Al-Ghaith, chief economist at Riyad Bank, said that the Saudi PMI has “shown positive signs of expansion, driven by strong sales, increased orders and effective marketing strategies.”

“Firms anticipate a continuous increase in output, fuelled by a robust inflow of new projects,” he added.

He noted that manufacturers, in particular, were highly optimistic about the next 12 months as they anticipate a favorable business climate.

Al-Ghaith went on to say that the wholesale and retail sectors also showed signs of strong expansion in November, in line with the overall positive sentiment in the Kingdom’s non-oil private sector economy.

“This bodes well for Saudi Arabia's economic growth and suggests a favorable environment for businesses in various industries,” he stated.

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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)

Telecommunications companies listed on the Saudi Stock Exchange (Tadawul) achieved a 12.46 percent growth in their net profits, which reached SAR 4.07 billion ($1.09 billion) during the second quarter of 2024, compared to SAR 3.62 billion ($965 million) during the same period last year.

They also recorded a 4.76 percent growth in revenues during the same quarter, after achieving sales worth more than SAR 26.18 billion ($7 billion), compared to SAR 24.99 billion ($6.66 billion) in the same quarter of 2023.

The growth in the revenues and net profitability is the result of several factors, including the increase in sales volume and revenues, especially in the business sector and fifth generation services, as well as the decrease in operating expenses and the focus on improving operational efficiency, controlling costs, and moving towards investment in infrastructure.

The sector comprises four companies, three of which conclude their fiscal year in December: Saudi Telecom Company (STC), Mobily, and Zain Saudi Arabia. The fiscal year of Etihad Atheeb Telecommunications Company (GO) ends on March 31.

According to its financial results announced on Tadawul, Etihad Etisalat Company (Mobily) achieved a 33 percent growth rate of profits, bringing its profits to SAR 661 million by the end of the second quarter of 2024, compared to SAR 497 million during the same period in 2023. The company also achieved a 4.59 percent growth in revenues to reach SAR 4.47 billion, compared to SAR 4.27 billion in the same quarter of last year.

The Saudi Telecom Company achieved the highest net profits among the sector’s companies, at about SAR 3.304 billion in the second quarter of 2024, compared to SAR 3.008 billion in the same quarter of 2023. The company registered a growth of 4.52 percent in revenues.

On the other hand, the revenues of the Saudi Mobile Telecommunications Company (Zain Saudi Arabia) increased by about 6.69 percent, as it recorded SAR 2.55 billion during the second quarter of 2024, compared to SAR 2.39 billion in the same period last year.

Commenting on the quarterly results of the sector’s companies, and the varying net profits, the head of asset management at Rassanah Capital, Thamer Al-Saeed, told Asharq Al-Awsat that the Saudi Telecom Company remains the sector leader in terms of customer base expansion.

He also noted the continued efforts of Mobily and Zain to offer many diverse products and other services.

Financial advisor at the Arab Trader Mohammed Al-Maymouni said the financial results of telecom sector companies have maintained a steady growth, up to 12 percent, adding that Mobily witnessed strong progress compared to the rest of the companies, despite the great competition which affected its revenues.

He added that Zain was moving at a good pace and its revenues have improved during the second quarter of 2024. However, its profits were affected by an increase in the financing cost by SAR 26.5 million riyals and a rise in interest, while net income declined significantly compared to the previous year, during which the company made exceptional returns.