Green shoots of growth

No major spikes nor slumps in general business, as per the preliminary full year results submitted to the MSX. The major year-on-year changes are explained typically by one off items. Overall, financial services and service-oriented companies continue their positive post-Covid bounce back, consistently outperforming industrial companies, which are still experiencing subpar performance as they struggle often against various global headwinds. In total, 20 companies posted losses, compared to 23 companies in 2022.

Within the financial sector, banks are maintaining their leadership position, marked by reduced loan impairment charges combined with improved net interest income as they have been able the ride the global increases in interest rates to post improved net interest margins. The leasing companies, who are wholesale funded, so are not able to reap the benefits of increasing interest rates, are however similarly reporting improvements, with a slight increase in profitability attributed primarily to expanding loan portfolios. Since the insurance companies have been given an extended reporting deadline, to cope with the arduous requirements of IFRS 17, they have not yet reported.

Within the Industrial sector, encompassing construction, manufacturing, and real estate, even excluding the RO 97m one-off hit taken by Raysut Cement in the prior year, construction income is still slightly down. The manufacturing sector is also facing challenging times due to several factors, notably the global challenges posed by high interest rates and the destabilizing impacts of various wars. The reported improvement came entirely from Oman Cables, which posted a RO 8m improvement in profitability. It is hoped that ensuing free trade agreements with neighboring countries will open up new export opportunities for Oman manufacturers. The real estate gain came from the launch of the Pearl REIF, which posted a RO 6m gain in its inaugural year.

Lastly, the service sector offers a contrasting landscape. With the exception of SMN Power that recorded a loss of RO 16m after providing for impairment of its plant, the energy companies reported robust profitability. Whilst the profits of the three petrol station operators were down only slightly, this was offset by impressive growth of the new market participant, OQ Networks withing the oil and gas sector. The story in tourism is less rosy, as 3 of the 5 hotel operators again posted losses.