Top 20 by growth indicators
Published: 12/05/2017 12:00 pm
Private companies in Oman braved a number of unfavourable conditions such as tightening of liquidity, delayed payments, and a curb on government spending in 2016, which impacted growth and profitability.
In a volatile year, only 14 out of 50 companies reported double digit growth in overall revenue. However there were some encouraging factors also as both the Islamic banks operating in the country reported very healthy growth in revenues, one of them, Bank Nizwa, also reported profit for the first time since its inception. In terms of profitability, most of the power companies reported a healthy growth riding over the increasing demand for electricity.
Al Jazeera Steel and Omantel report highest profit growth among listed companies. Omantel's net profit witnessed a sharp increase compare to last year as it had one time provision for certain write off previous year. Al Jazeera had taken various steps to diversify export market and it helped it registering over two fold increase in net profit.
Increase in profitability helped SMN Power holding and Shell Oman Marketing to emerge as top performers in terms of return on equity. Gulf Hotels and Oman Refreshment reported higher earning per share compared to other companies.
Bank Muscat, the country's largest lender, replaced Omantel to become the largest firm in 2016 by market capitalisation on the Muscat Securities Market. The total market capitalisation of the bank stood at RO1.18bn by the end of 2016. Bank Muscat posted a net profit of RO176.56mn for the year ended December 31, 2016. This was 0.6 per cent higher than 2015’s net profit of RO175.45mn. The lender's operating income rose by over two per cent to RO416.17mn in 2016 compared to RO407.73mn in the previous year. Net loans and advances from conventional operation increased by 6.1 per cent to RO7.1bn in 2016 as against RO6.7bn in the previous year. Customer deposits from the conventional operation decreased by 0.6 per cent to RO6.69bn last year as against RO6.73bn in 2015.
One of the major highlight of the bank's performance was the robust growth achieved in its Islamic finance business. The bank's income its Islamic window Meethaq rose to RO23.58mn in 2016 compared to RO18.65mn in the previous year. In its annual report the bank said, “Meethaq took a major stride in supporting the sultanate’s economic development as Oman’s first and only Shari’a based aircraft finance was extended to Oman Air for acquiring its second Boeing 787 Dreamliner.”
Last year Meethaq hosted a MoU between BAUER Nimr and Sebacic Oman forecaster cultivation in Oman using treated oil contaminated water, the report said. Another highlight of 2016 was that the bank was mandated to arrange syndicated loans for a petrochemical project and a liquefied petroleum gas (LPG) project. The bank was also mandated as lead arranger for two power generation projects and a water desalination plant project.
Omantel slipped to the second position in 2016 among the largest companies by market capitalisation on Muscat Securities Market. For the financial year ended on 2016, the company reported a net profit of RO116.67mn, a growth of 140 per cent as the net profit in 2015 includes one off charges of impairment with respect to its investment in a subsidiary and voluntary end of services.
The company's revenue for 2016 increased by 3.2 per cent to RO523.6mn from RO507.3mn in the previous year. Omantel said in its annual report that the growth in revenue was mainly driven by broadband revenues which rose by 11 per cent and wholesale revenues by 19 per cent. Conventional revenue streams such as voices and SMS have continued its declining trend due to over-the-top (OTT) service, it added.
The company in its annual report said that the Omani telecom market in 2017 will see the impact of several fundamental regulatory changes. First, the increase of royalties from seven per cent to 12 per cent on gross revenue, which is estimated at 17 per cent of 2016's net profit. This is in addition to the increase in corporate taxation from 12 per cent to 15 per cent.
“This is expected to conclude to a negative impact on Omantel’s net profitability in 2017. Secondly, the advent of a new licensed mobile operator becomes a strong reality as TRA finally invited bids for a third class-1 license in November 2016. Omantel and all the existing operators are expected to get significantly impacted by the hyper competition, coupled with the newly imposed Access & Interconnection (A&I) regulations going forward,” the report said.
Bank Dhofar climbed two spots in 2016 to become the third most valuable company listed on the Muscat Securities Market. The bank's net profit grew by 1.8 per cent to RO47.62mn in 2016 compared to RO46.77mn in 2015. The company's operating income also rose by over 10.5 per cent to RO127.35mn in 2016 compared to RO 115.23mn in 2015.
The bank, however, in terms of revenue growth was able to secure 14th position among the top 20 companies with highest increase in revenue.
The company in its annual report said it continued to grow in all key areas in the year 2016 despite the current economic and financial situation driven by volatile oil prices in 2016. The net loans and advances to customers rose to RO2.99bn as of December 31, 2016, showing a growth of 9.52 per cent from RO2.73bn in 2015. Customer deposits achieved a growth of
11.58 per cent from RO 2.59bn in 2015 to reach RO 2.89bn at the end of 2016. The total assets reached RO 3.95bn by the end of 2016 as compared to RO3.59bn in 2015, thus registering a growth in 10.02 per cent.
As part of its planned capital augmentation programme and strengthening the liquidity base, the bank successfully completed a rights issue of RO40mn in 2016 and closed a club deal as well as syndicated borrowings of US$350mn at competitive rates.
The report revealed that the Ministry of Housing, in coordination with the Ministry of Tourism has allotted 33 plots spread over millions of sq m across Oman this year for setting up of tourism-related projects with an aim to boost growth and diversify the national economy. The bank will be exploring new business opportunities in these thrust areas.
Oman's largest private telecom service provider fell one slot to become the fourth most valuable company on the Muscat Securities Market. For the financial year ended on December 31, 2016, the company reported a net profit of RO 46.27mn, an increase of over 11 per cent compare to previous year's profit of RO41.63mn. The telco's revenues for the year 2016 grew by 7.12 per cent to RO270mn compared with RO252.1 mn in 2015. The growth was driven by increases in both mobile and fixed data revenue.
The company said, the total number of customers grew by 5.7 per cent in 2016 from 2,787,999 to 2,946,660. The fixed service customer base increased by 24.2 per cent to 87,907 in 2016 compared to 70,771 in 2015. The mobile-post-paid customer base grew by 5.8 per cent to 218,325 customers in 2016 compared with 206,259 customers in 2015. The mobile pre-paid customer base for 2016 increased by 5.2 per cent to 2,640,428 compared to 2,510,969 of last year.
In terms of revenue growth, the company is 16th among the top 20 companies where as in terms of profit growth, it came 15th.
In its annual report, the company said, “The year 2016 started with Ooredoo taking part in Competitive Network Benchmark Testing by GWS. They compared our network quality to those of our competitors and showed us that we were head and shoulders above them.
“The fibre backbone completion was a strong achievement in 2015 and in 2016 we continued to invest nationwide. The data highways we planned for, and invested in are resulting in zero technical bottlenecks (and no concerns about seeing any in the future) as demands increase.”
National Bank of Oman
National Bank of Oman, fell one slot to become fifth most valuable company on Muscat Securities Market. The lender's revenue grew marginally to RO136.11mn in 2016 as against RO135.72mn in the previous year. The company's net profit for the year under consideration fell by 7.2 per cent to RO55.78mn compared to RO60.11mn in the previous year.
In its annual report the bank said that the decline in net profit is a result of their focus on strong asset quality, enhancing customer experience and loyalty levels and tight balance sheet management took precedence over loan growth.
The company said their business also got impacted in the UAE, another key market for NBO, which is in the midst of a cyclical slow-down in economic activity and this is expected to continue to have an impact on the growth going forward. The report revealed the lender's operating costs increased by a modest 4.4 per cent over the corresponding period last year as a result of government mandated minimum pay rises and ongoing strategic investments in people and infrastructure.
“Our investments into the UAE have given NBO a clear competitive advantage and enabled us to play a uniquely active role in support of cross‐border trade between Oman and the UAE. This ability was further strengthened in 2016 with the launch of a seamless cross‐border banking offering to boost Oman‐UAE trade. The series of technological innovations enables clients to make instant transfers between Oman and the UAE using one account only,” the report said.
NBO said its Islamic window, Muzn, continues to perform well and have grown to six dedicated branches across the sultanate. In 2016, Muzn’s assets reached RO 139mn, an increase of 19 per cent over the corresponding period last year. Similarly, revenues grew by 12 per cent to reach RO3.7mn. These numbers also translated into a net profit of RO1.2mn, further underlining the demand for Islamic banking products and services in Oman.
Raysut Cement, rose four places to become the sixth largest company by market capitalisation despite having a negative growth in revenue and profit. The company's net profit for 2016 fell by 1.15 per cent to RO20.71mn compared to RO20.95mn in the previous year. Similarly, the company's overall revenue also fell 2.21 per cent to RO92.59mn in 2016 compared to RO94.68mn in the previous year.
In its annual report the company said that there have been severe competitions across the markets coupled with socio political disturbances in Yemen. Unabated supply of cement from UAE due to surplus capacity and price decline there, has caused dent on price and volume sales in the northern markets in Oman in particular. The construction sector growth is mostly driven by public spending, and the region as a whole is under pressure from global situation as well as recent oil price decline.
The company said that in 2016, the demand rose in Oman due to several ongoing and new government initiatives. But excess capacity led UAE producers to continue supplies at substantially lower prices making the situation very competitive for domestic producers. The higher level of construction activities in the southern and central region has salvaged the situation largely. In the export segment, the volume is lower in Yemen due to the difficulties there.
On future outlook, the company said in its report that various cost reductions initiatives coupled with optimisation of distribution of cement keeping market shares and profitability in mind, would be the major area of attention in the coming years. With those internal initiatives the company is hopeful to minimise the pressure to a great extent.
The company said it has successfully commissioned the gas supply station in Salalah during the year and this upgrade has already started giving the benefit of higher production as the company is expected to achieve additional cement production to the tune of 130,000-140,000 tonnes per annum.
Ahlibank fell by one slot to become the seventh most valuable firm by market capitalisation in 2016. The bank's net profit rose by 6.6 per cent to RO29.55mn compared to RO27.72mn in the previous year. However, in terms of revenue growth, the lender suffered a set back as its total earnings for the year under consideration fell 4.9 per cent to RO53.57mn compared to RO55.97mn in the previous year.
The company in its annual report said, “The banking sector continues to be resilient despite the global and domestic macroeconomic challenges. Going forward, Ahlibank will leverage on its strong foundations and strive to grow and achieve higher levels of accomplishment in the industry. We look forward to our valued customers support as we seek to continue to build the image and presence of Ahlibank in Oman’s banking sector.”
The bank said its customer deposits decreased by 2.3 per cent in 2016 to RO1.3bn compared to the previous year after growing compounded annually since 2012. The bank maintains its strategy to focus on expanding a lower cost funding base, through product innovation and balance sheet management.
The report said, the modest increase in gross loans and financing during 2016 reflects the bank’s strategy of active balance sheet management during challenging times to position the bank for sustainable profitable growth in the coming years. The focus in 2016 having been to maintain high asset quality with a non-performing loans to gross loans ratio of 1.1 per cent comparably the lowest amongst peers.
Bank Sohar, which is celebrating its 10th anniversary, remains at the eighth spot among the top 20 companies on Muscat Securities Market by market capitalisation. The bank suffered a set back in 2016 as its net profit fell by over 31.14 per cent to RO19.11mn from 27.75mn in the corresponding year. The bank's operating income also declined to RO66.56mn in the year under consideration from RO70.91mn in the corresponding period, an year ago.
In its annual report, the lender said, “During year 2016, the bank has made non-specific provisions of RO2.744mn for possible credit losses inherent within the loans and advances portfolio. The bank has adopted the Central Bank of Oman's norms for making the provision against loans and advances portfolio basis which represents the possible loss to the portfolio.”
The bank said it has made a specific provision of RO5.735mn in conformity with CBO regulations. The bank has also made a net provision of RO2.973mn for impairment on investments including write back on the sale of impaired investments. All these factors have weighed on the company's balance sheet.
The report said, over the past decade, the bank has emerged as one of the leading financial institutions on the Oman banking scene, which now comprises a total of seven licensed local banks, nine foreign banks, two specialised banks, two dedicated Islamic banks and six Islamic banking windows of local banks. The presence of such a large number of players has given rise to intense competition, which require it to remain focused, driven and innovative in growing its customer base and expanding market share, the report said.
HSBC Bank Oman
HSBC Bank retain its position as the ninth most valuable firm for the second straight year among the companies listed on Muscat Securities Market. Last year, the company reported a net profit growth of 30.7 per cent at RO16.9mn compared to RO12.93mn in the previous year. The lender's revenue grew by 2.28 per cent to RO75.21mn in 2016, compared to RO73.62mn in the previous year. The company in its annual report said that the jump in net profit was primarily due to a combination of higher operating income and lower operating expenses partly offset by higher loan impairment charges.
Explaining the various steps taken by the bank to reduce cost, the report said total operating expenses reduced by 11.5 per cent to RO48.4mn. The reduction was primarily due to a decrease in staff costs of RO1.2mn, marketing and advertisement costs of RO400,000, premises and equipment costs of RO900,000 and other administrative costs of RO3.1mn.
On the performance of banks in 2016, the report said, “The banking sector remained resilient supporting the economic diversification initiatives, credit needs and serving requirements of the community. Credit to the private sector increased by 10.1 per cent to RO 19.7bn as at the end of December 2016. Of the total credit to the private sector, the household sector (mainly under personal loans) stood at 46.5 per cent closely followed by the non-financial corporate sector at 45.2 per cent, financial corporations at 5.1 per cent and other sectors the remaining 3.2 per cent.
HSBC's total assets in 2016 increased from RO2. 21bn to RO2.25bn. The major upturn in assets comprised of RO217.6mn in loans and advances.
Sembcorp Salalah Power and Water Company
Sembcorp Salalah Power and Water Company fell three places to become tenth largest firm by market capitalisation among listed firms on Muscat Securities Market. The company reported a net profit of RO14.63mn in 2016, a growth of 7.26 per cent compared to the previous year's profit of RO13.64mn.
The company's revenue in the year under consideration grew by 5.32 per cent to RO77.54mn, compared to RO73.62mn in the previous year. The company in its annual report said that despite the challenging environment, it was able to increase its net profit by RO1mn because of the improved plant efficiency, better reliability and effective cost management.
Sembcorp Salalah is a key power and water producer in the Dhofar region. The company supplies around 85 per cent of the power demand and nearly all of its desalinated water demand. The company has entered into a long-term maintenance contract with General Electric, the manufacturer of the plant’s gas turbine units, for the scheduled maintenance of these units.
On future outlook, the company said in the report, “2016 was a challenging year mainly due to government austerity measures, negative tariff indexation and other uncontrollable factors which impacted the profitability of the company negatively. However, the company was still able to outperform the approved targets by about 3.4 per cent primarily due to good operating performance and cost management. The year 2017 is expected to be more challenging than 2016 due to continued pressures resulting from government austerity measures in response to continued low oil prices.”
Integrated power plant (IPP) Phoenix Power Co saw its revenue rise mainly due to higher commercial availability and increased dispatch (pass‐through) of the plant. The company's revenue grew by 15.15 per cent to RO117.3mn in 2016 compared to RO101.87 in 2015. But profits dropped by 35.8 per cent to RO18.46mn as opposed to RO28.77mn in 2015. Phoenix attributed the profit dip to liquidated damages of RO10.12mn which have been recognised in 2016 compared with RO23.51mn being recognised in 2015 under the EPC Contract.
According to its financial statement, its total assets stood at RO623.92mn as on December 31, 2016 as compared to RO636.25mn in 2015. This was mainly due to a full year’s depreciation being charged for the year. The cash and cash equivalents stand at RO 22.49mn as at December 31, 2016 as compared to RO 20.5mn at the same date in 2015. Phoenix Power has entered into a power purchasing agreement with OPWP who is the sole purchaser for a 15 year period until March 31, 2029.
According to the financial statement, the shareholders' funds (net assets) at RO153.28mn as of December 31, 2016 were higher when compared to RO137.2mn at the same date in 2015 due to profit for the year being offset by the dividend distribution in line with the net profit for the year. Hedging reserve (net of deferred tax) reducing equity by RO34.16mn reflects the fair value of the seven interest rate swaps and three currency swaps as at the balance sheet date and does not impact the company’s capability to distribute dividends to the shareholders. Term loans reduced to RO388.93mn as a result of scheduled repayments in keeping with financing agreements.
Shell Oman Marketing
Shell Oman Marketing performed well in 2016 amid the low oil price environment. The company's profits increased by13.06 per cent to RO16.02mn compared to RO14.17mn in 2015 while its revenues rose by 16.93 per cent to around RO393mn compared to RO336mn in the previous year. In this year's survey, Shell Oman Marketing has emerged sixth in revenue growth, 12th in profit growth, fourth in earnings per share and second in return on equity parameters.
The restructuring of the fuel price system and the introduction of new grade fuel Mogas 91 changed established business environment of the sector, the company said in its annual report. The company attributed the revenue growth to its investments in the retail sector and increased third party usage of their Mina Al Fahal terminal, cost control measure and a one-off non-recurring item in Q1 2016. The net cash generated by the company from operating activities was RO24mn, 19 per cent higher than 2015.
According to the company's annual financial statement, its retail business saw reduced demand after the government's subsidy overhaul. But the segment remains the company's largest revenue generator. Despite challenges, the company was able to achieve business profitability in the commercial fuel segment. The aviation business managed to retain existing customers and was able to win a share of Oman Air volumes apart from winning new international customers. The lubricants business volumes were slightly higher than 2015. The marine business maintained its market position while the bitumen segment witnessed a drop.
The company board proposed a dividend of 106bz per share for the year.
Oman Cement Co's net profit for the year 2016 rose 10.09 per cent and its revenues grew by 8.47 per cent. The company posted a net profit of RO12.88mn as opposed to RO11.7mn in 2015. Its revenue was RO56.6mn compared to RO52.18 in the previous year. The company is 17th in the net profit growth category and 19th on the earnings per share segment.
According to its financial statement, the plant's annual installed capacity is now 2.6mn tonnes of clinker, which can produce 2.74mn tonnes of cement. Due to major maintenance activities in 2016, clinker production has been lower than capacity. Last year, it produced 2.12mn tonnes of clinker and 2.30mn tonnes of cement. The company also imported 200,024 MTS of clinker to improve cement production.
In 2016, the company's total sales stood at 2.3mn MTS including 13,469MTS of oil-well cement exported. The company has expressed confidence that it will continue to retain its market share in Oman. Its surplus funds remain invested in fixed deposits, bonds sukuk, subordinated loans of banks and equity share capital of the company.
Talking about risks faced by the company, Jamal Shamis al Hooti, CEO, said that budget cuts made to minimise the deficit created by low oil prices may have an impact on cement prices in the long run. Increase in gas prices from january 2015, plus the proposed increase in power tariffs in 2017 are also seen as major challenges by the company. Over supply from neighbouring countries continues to be a threat. He expressed confidence that the company will meet these challenges through dynamic pricing, cost control an higher capacity utilisation. The company will also work to increase their market share.
SMN Power Holding
Despite incurring a dip in revenues, SMN Power Holding posted a net profit growth in 2016. The company's profits grew by 30.38 per cent to RO11.76mn from RO9.02mn in 2015. Its revenues were down by 19.67 per cent at RO87.99mn compared to RO109.54mn in 2015.
The profit growth has been attributed to the reduction in finance charges resulting from a gain on provision for site restoration, which is a non-cash item, amounting to RO2.6mn. In this year's survey, the company came first in the return on equities category, sixth in profit growth and 15th in earnings per share segments.
The company's revenues were impacted the disruption of operations at the company's plants. The commercial availability at Barka II Power and Water Desalination plant was 80.2 per cent (power) because of a gas turbine failure. The repairs in major gas turbines at the Al Rusail Power plant also saw the output reduced to 83 per cent as opposed to 87.6 per cent in 2015.
According to its annual report, in 2016, the company produced an aggregate net power volume of 3,663GWh (4,835GWh in 2015) and a total volume of 38.863,000 cu m (43,101,000 cu m in 2015) of potable water. The company said that the decrease in water production was due to higher maintenance carried out at Barka II in 2016 after gas turbine 1 (GT1) tripped on generator protections at the plant on March 14.
The company's share prices reached 712bz as of December 31, 2016. Since its IPO, the company's aggregate level of dividend paid amounts to 237bz per share compared to 215bz as projected in the IPO prospectus.
Oman Cables Industry
The Oman Cables Industry's revenues and profit decreased in 2016 due to market conditions. The company's profits dropped by 26 per cent to RO15.76mn in 2016 as compared to RO21.34mn in 2015. Its revenues fell by 19.34 per cent to RO228.64mn in 2016 from RO283.47mn. The company attributed the decrease in profitability to increased competition in the market. The company is 13th on the return on equity list and has come third on the earnings per share category.
According to the company's financial statement, the prices of copper, the most important raw material in cables, which was 15 per cent lower compared to 2015 impacted their sales values despite maintaining volume. The low oil prices had an impact on the company's sales as payment from various electrical utilities inside and outside the company were delayed.
Oman Cable Industry also reported that its subsidiary company Oman Aluminium Processing Industries in Sohar also saw lower sales and profits in 2016 compared to 2015 due to fierce competition and price pressure. The company said its efforts to reduce production costs and overheads are yielding positive results as production efficiencies have increased.
According to the annual report, the company board approved the payment of a cash dividend of 85bz per share in 2016. It has entered into discussions/MOU with Prysmian of Milan, Italy for implementation of SAP ERP system. The company has successfully negotiated the buying of the remaining 60 per cent stake from the other shareholders of Associated Cables Private Limited, India, pending approvals from relevant regulators and shareholders.
On the company's future outlook, Fabio Romeo, chairman of Oman Cables Industry, said, “The countries in which the company’s products are being marketed, have been facing a slowdown in the respective economies due to low and uncertain oil prices and other factors. The company is gearing up to face the challenge in various ways.”
Oman Oil Marketing
Oman Oil Marketing Co posted a revenue of RO425.92mn, which is 15.7 per cent more than 2015's revenue of RO368.15mn. But its profits went down by 21.4 per cent to RO9.6mn in 2016 compared to RO12.21mn in 2015. It ranks seventh in revenue growth, 16th in return on equity and sixth in terms of earnings per share.
The company's revenues were bolstered by the deregulation of fuel prices by the government. According to its financial statement, Oman Oil Marketing's financial position remained healthy with total assets at approximately RO119mn as of December 31, 2016. The company spend RO7.9mn on capital expenditure financed by internal funds.
The company has been able to retain its market share in the financial year ended December 31, 2016. Ahlain convenience stores as well as international brands like Burger King, Baskin Robbins and Subway at its retail outlets have helped in improving customer experience. The commercial business segment witnessed a drop compared to 2015 due to lower oil prices. The lubricant business performance in 2016 was mixed, but Oman Oil's own-brand product made good progress. The company was able to sustain same volumes as 2015 for its aviation business in 2016. The company expects strong growth after the opening of the new airport in Muscat. The marine business is focusing on expanding its customer base, amid challenges.
Commenting on the outlook for the coming year, in the financial statement, Oman Oil Marketing board chairman Salim Abdullah al Rawas, said, “The outlook for the coming year is challenging with lower oil prices due to global events would mean further reduction in government spending that would affect infrastructure and capital projects. This could have repercussions on the overall economy in the long term. Further, the potential changes in the tax framework, further impact from removal of fuel subsidies and reduction in oil prices could adversely affect the industry.”
Al Suwadi Power
Al Suwadi Power Co's profits rose by 25.1 per cent to RO9.07mn per cent in 2016 a compared to RO7.25mn the year before. Its revenues rose by around four per cent to RO69.36mn from RO66.71mn in 2015. The company is now at the seventh position in the Top 20 Profit Growth list, down from the fourth position that it held in last year's survey.
According to the company's financial report, the plant's reliability stood at 99.64 per cent, while it achieved a thermal efficiency of 100.84 per cent. The plant delivered 4,019 Gwh to the Omani grid, an increase of 4.83 per cent compared to 2015. The company was able to ensure power supply during September when there was a sudden gas supply interruption. It resorted to diesel to generate power during that period. The company also successfully managed to complete the first extended hot gas path inspection of one of their gas turbines. Al Suwadi clocked 2,009 lost time accident free days in 2016, since its inception. It was also able to meet most of the new environment permit conditions introduced by the Ministry of Environment and Climate. The company also spent over RO15,000 on CSR activities.
The company paid a dividend of 9.20bz per share in 2016 as opposed to 8.30bz in 2015.
“All reasonable measures are taken by the management to maintain excellent operational performance during 2017. Any changes in the power supply and demand landscape in the sultanate has no substantial impact on the financial performance of the company since its profitability is mainly derived from the plant's availability and reliability,” said Charles Paul Dexter, chairperson of the board, about the company's medium term outlook in the financial statement.
The country's first Islamic bank, enters the Top 20 list after posting profits for the first time since its inception in 2013. The company which had incurred a loss of RO5.26mn in 2015 registered a profit of RO109,722 in 2016. The bank's revenues grew by almost 46 per cent to RO17.38mn in 2016 compared to RO11.91 in 2015, and is ranked fourth in the Top 20 Revenue Growth list, two positions below its previous ranking.
The bank's assets grew by 49 per cent to reach RO516mn whereas customer deposits increased by 86 per cent to reach RO351mn. Operating income for the year rose by 46 per cent, and operating expenses declined by three per cent. According to the financial report, the bank's strategic cost management helped in declining the cost to income ratio to below 91 per cent, allowing them to achieve their first net profit.
“Bank Nizwa’s financial performance this year demonstrated solid growth throughout its operation, reinforcing its leadership position within the sector. Not only were we able to maintain our status as Oman’s fastest-growing Islamic financial institution, we also managed to grow the sector and secure major financial achievements,” said, Sayyid Amjad bin Mohammed al Busaidi, chairman of the Bank Nizwa, in the financial report.
He added, “The bank’s customer financing portfolio, deposits, assets and operating income all reported substantial growth and as a result, we achieved a historic first net profit since our founding in 2013. During the year the bank identified key opportunities, critical areas of improvement and subsequent tactical plans that helped retain its position as the largest full-fledged Islamic bank in the country.” Al Batinah Power Co's profits grew by 17.23 per cent to RO8.3mn from RO7.08mn in 2015. Its revenues grew by 4.6 per cent to RO71.05mn in 2016 compared to RO67.93mn in 2015. The company came 19th in terms of revenue growth from seventh in 2015 and 11th in terms of profit growth from fifth in 2015. Though the company did well, its growth rate in these major parameters were lesser compared to that in 2015.
Al Batinah Power
According to the Al Batinah's financial reports, it operated with 99.5 per cent reliability despite being asked by the government to increase its contribution to the Oman grid by 7.4 per cent to 4,450GWh in 2016. The company claims to have achieved this target without any zero lost time and also clocked 2,005 lost time accident free days since its inception.
Higher load enhanced revenues of the company but also raised direct costs especially due to higher gas prices. The company also finished the maintenance of one of its two gas turbines in November. Due to this, the company paid a dividend of 8.58bz per share, which is 2.8 per cent lower than in 2015. The company's share prices ended at 180bz this year.
Commenting about the company's medium term outlook in the financial report, chairperson of the board Catherine Lorgere Chouteau, said, “All reasonable measures taken by the management to maintain high reliability levels in 2017. Any change in the power supply and demand landscape in the sultanate has substantially no impact on the financial performance of the company since its net profit is mainly derived from its plant reliability.
“The company continues to monitor developments in the financial markets and should these show significant improvement, the refinancing exercise will be revived.”
Salalah Port Services
Despite the challenges due to low oil price issue, Salalah Port Services Company posted better results as compared to 2015. Higher volumes in 2016 led to the 10.6 per cent increase in the company's consolidated net profit for the year to RO5.73mn as compared to RO5.18mn in 2015, which also saw them become 16th in profit growth 13th in terms of revenue growth. The company's consolidated revenues rose 11 per cent from RO49.51 in 2015 to RO54.87mn. This was achieved amid higher costs incurred due to removal of fuel subsidies, staff costs, repair and maintenance etc. Salalah Port Services also distributed 20 per cent annual dividend which equates to 20bz per share.
The container terminal handled 3.325mn TEUs – compared to 2.569mn TEUs when compared to 2015, a growth of 29 per cent in TEU terms. The Port of Salalah General Cargo handled 13.04mn tonnes during 2016 – a growth of four per cent over 2015. The company was able to retain all its major customers with its improved productivity and service quality. One major customer's business share rose to 49 per cent compared to 2015.
“The year 2016 was marked by historically low shipping rates and profitability for carriers and an unprecedented consolidation of carriers by mergers and acquisitions as well as alliances. Future transshipment business will be won or lost in larger tranches as procurement decisions in alliances will impact greater volumes, said Ahmed bin Nasser al Mahrizi, chairman of Salalah Port Services, on the future outlook in the company's annual report.
The company continues to invest in training and development of its workers, with a focus on enhancing the Omanisation and skills development of local talent, the report said. The company also spend RO72,000 on CSR activities in the Dhofar region in 2016.