3Q earnings season in full swing: We have a mixed bag of reports from three regional players this morning. Acwa Power, Sabic and Emirates Steel Arkan released their 3Q earnings last week and we have the details.

ACWA POWER-

A good 3Q: Saudi renewables giant Acwa Power reported a 16.4% increase in net income y-o-y for 3Q 2023 to SAR 397.9 bn, according to an earnings release released on Thursday. The company’s revenues saw a 22.1% y-o-y uptick to SAR 1.54 bn.

What’s behind the numbers? The y-o-y increase in profits to Acwa’s parent stockholders is attributable to a 22.5% increase in investment from equity shareholders compared to the first nine months of last year, the company noted in its Tadawul disclosure. Increased operating profit was the driving catalyst, the company notes, adding that it was partially hampered by high interest rates along with the firm’s sukuk issuance in February earlier this year, through which it raised SAR 1.8 bn. A decrease in Zakat and tax charges on the back of deferred tax credits also contributed to the company’s uptick in the company’s net income, Acwa notes.

There’s a slight dip compared to 2Q: The company’s net income fell 3.97% q-o-q to SAR 398 mn in 3Q due to higher zakat and tax charge and higher finance charges, which was partially offset by higher operating income costs, according to the earnings release.

SABIC-

A rocky 3Q: Saudi Basic Industries Corporation (Sabic) — which is 70% owned by KSA’s Aramco — reported SAR 2.88 bn in net losses for 3Q 2023 compared to a net income of SAR 1.84 bn for the same period last year, according to an earnings release released on Thursday. The company’s revenues also dropped 16.94% y-o-y to SAR 35.98 bn.

What drove the drop? The divestment of Sabic’s shares in the Saudi Iron and Steel Company (Hadeed) yielded non-cash losses amounting to SAR 2.93 bn, the company notes. The company’s net profits for 3Q totalled SAR 536 mn, a 67% drop from the SAR 1.64 bn in the same quarter last year on the back of a global “stagnation in global demand for chemicals,” which it says led to a depreciation in average product pricing by a value of SAR 7.3 bn, despite an uptick in sales volumes. Compounding the drop in global demand, Sabic’s JVs and subsidiaries saw their sales volumes drop and their selling prices fall, which led to SAR 919 mn in losses, it said. A return-on-investment (RoI) restructuring program in Europe also saw it lose SAR 255 mn in impairment charges.

EMIRATES STEEL ARKAN-

Mixed results for 3Q: Emirates Steel Arkan recorded a 4% y-o-y bump in net income in 3Q to AED 107 mn, partially due to a 21% decline in direct costs to AED 1.8 bn, according to an ADX disclosure (pdf). The company saw its revenues for this period dip 18% y-o-y to AED 2 bn.