An eyebrow-raising set of results for the Gulf sceptics

Results from some of the big corporate players in the Gulf have flowed in this week. They were perhaps not what we were expecting.

In the UAE, developer Emaar said UAE property sales in the first quarter were up over a fifth year on year – despite a month of conflict in those three. Profit and revenue grew by double digits.

Macroeconomic and geopolitical conditions remain “dynamic”, the company said.

Flag carrier Emirates Airline, owned by sovereign wealth fund Investment Corporation of Dubai, also reported. Record profits. The airline’s financial year runs March to March, so only one of the 12 months was affected by the conflict. Until February Dubai and its flagship airline had been running red hot.

In Saudi Arabia, the giant oil company Aramco announced its largest quarterly rise in net earnings, on the back of higher prices and crude exports via the Red Sea.

The shares are up 28 percent year to date.

Sabic, the kingdom’s largest petrochemicals company, which is 70 percent owned by Aramco, announced profits of SAR1.45 billion ($386 million) in the first quarter, having made a loss in the previous period.

Sabic shares are up 19 percent year to date.

Back in the UAE, first-quarter earnings at Emirates NBD, Dubai’s largest bank by assets, were up 3 percent.

At First Abu Dhabi, first-quarter net profit fell 2 percent year on year to $1.4 billion, according to AGBI calculations. That is the only drop in this admittedly unscientific survey.

The UAE’s two top banks took bigger provisions in the first quarter as precautionary measures following the outbreak of war. This is despite the value of their non-performing loans declining, according to Matt Smith.

International Holding Company, which dominates the Abu Dhabi stock exchange and has about 1,500 subsidiaries, announced AED8.1 billion ($2.2 billion) in first-quarter profits. Its revenue rose by a third.

These are disparate companies. Airlines are not banks or property developers or petrochemical behemoths. Typically, only one third of the reporting period was caught by the Israeli-US conflict with Iran.

Nonetheless this is a loud collective riposte to sceptics.

Emaar, for example, has set itself up for years to come no matter what, according to Josh Corder, our property and construction editor. Josh points to two figures: revenue backlog and default rate.

Emaar has a backlog worth over AED134 billion and a default rate of less than 1 percent of sales.

Yes, the shares are down 16 percent year to date but, in effect, the developer has a steady income stream for the next five years from off-plan payments.

Emirates, arguably the most exposed to the conflict, had a cash pile of AED59 billion at the end of March.

“That’s not a buffer, that’s a fortress,” Linus Bauer, founder of consultancy BAA & Partners, told Gavin Gibbon.

We shall see what the second three months of the year bring.

Further reading:

• The logic behind the UAE’s pursuit of US currency swaps
• Dubai property can bounce back but prepare for a tough summer
• Vision 2030 at 10: Progress, priorities and unfinished business