Geopolitics to split 2Q fortunes for Saudi corporates

Saudi firms’ 2Q earnings are expected to diverge along geopolitical fault lines, with shipping disruptions, travel restrictions, and oil price volatility separating the gainers from losers, according to Riyad Capital’s 2Q earnings preview (pdf).

Banks lead the pack: Sector net income is forecast to rise 6% y-o-y to SAR 21.6 bn, supported by 10% growth in fee and commission income, 7% in financing, and 8% in deposits. Al Rajhi is expected to top the group with a 14% y-o-y rise in net income to SAR 7 bn. Albilad is forecast to post the fastest financing growth at around 14%.

Petrochemicals are still in the red, but less so. The sector’s aggregate net loss is expected to narrow to SAR 936 mn from SAR 3.6 bn a year earlier, though revenue is forecast to fall 40% y-o-y to SAR 27.5 bn on higher feedstock costs and shipping disruptions. Two exceptions stand out: Yansab, with net income projected to surge 419% y-o-y to SAR 231 mn, and SIIG, expected to reach SAR 143 mn from SAR 20 mn. SABIC is still forecast to lose SAR 308 mn, but that’s a significant improvement from a SAR 4.1 bn loss in 2Q 2025.

Telecoms look softer, but the comparison is misleading. Sector net income is projected to decline 4% y-o-y to SAR 4.6 bn, largely because STC’s year-ago results included a one-off favorable zakat and tax impact. Strip that out and earnings would be up. STC is expected to report an 8% y-o-y decline in net income to SAR 3.5 bn. Solutions and Elm are forecast to hold steady at a combined SAR 1 bn.

Energy and utilities are climbing, with the majority of companies in Riyadh Capital’s coverage expected to have net income growth in the quarter ranging from 11% to 26% y-o-y. Saudi Electricity Company is the largest contributor at SAR 3.8 bn, up 24% y-o-y. Marafiq posted the fastest growth at 26% to SAR 138 mn. The exception is Arabian Drilling, which is expected to slip to a SAR 42 mn loss from SAR 7 mn net income a year ago after offshore rig suspensions.

Transportation takes the hardest hit. Sector net income is forecast to end the quarter in the green after recording a SAR 515 mn loss during 2Q 2025 as Flynas cuts its losses by two thirds. Flynas is expected to be the weakest performer with a SAR 298.8 mn loss on lower operating capacity and higher fuel costs. Lumi, Budget Saudi, and Theeb are all expected to have lower bottom lines. The one bright spot is SAL, with net income expected to grow 7% y-o-y to SAR 174.1 mn on higher cargo volumes and improved pricing.

Cement’s volumes are up, bottom lines are down. Sales volumes for the sector are expected to rise around 3% y-o-y on seasonality and stronger demand, led by Yamama and Saudi Cement. But a 36% decline in clinker exports and mixed selling prices are forecast to drag net income down 6% y-o-y to SAR 351 mn and revenue down 2% to SAR 1.7 bn.

Healthcare stays steady: Mouwasat and Dr. Sulaiman Al Habib are expected to post combined net income growth of 2% y-o-y to SAR 791 mn, with revenue rising 8% to SAR 4.5 bn.