Saudi Tadawul Group second-quarter profit dips on lower trading services

Net income after zakat for the three month period to the end of June fell to $36.7m

Tadawul's operating revenue for the second quarter fell 4.9 per cent to 298.1m Saudi riyals. Reuters

Saudi Tadawul Group, the holding company that operates the kingdom's stock exchange, posted a 24 per cent year-on-year decline in second-quarter profit on lower operating revenue and higher expenses.

Net profit after zakat for the three months to the end of June fell to 137.7 million Saudi riyals ($36.7m), the group said in a bourse filing on Sunday.

Operating revenue for the second quarter fell 4.9 per cent year-on-year to 298.1m riyals due to a drop in trading services and listing fees.

The bourse's operating expenditures increased 16.6 per cent year-on-year to 160.6m riyals in the second quarter, mainly because of an increase in salaries and related benefits, the largest cost item, it said.

Tadawul is among the top 10 global stock markets and had a market capitalisation of about $2.8 trillion on December 8, 2021, when it listed. It became the third publicly traded regional stock exchange, after the Dubai Financial Market and Boursa Kuwait.

The group's earnings before interest, tax, depreciation and amortisation (Ebitda) decreased by 18.8 per cent year-on-year to 155.3m riyals in the second quarter due to the fall in operating revenue and higher operating expenditures.

Free cash flow decreased 14 per cent year-on-year to 313m riyals in the second quarter as a result of lower Ebitda.

The Tadawul's capital markets segment revenue, which includes trading services and listing fees, fell 14.2 per cent year-on-year to 115.9m riyals in the second quarter.

Trading services revenue fell an annual 23.6 per cent to 89.4m riyals due to “normalisation of trading values” that contracted by 21.6 per cent, the bourse said.

Listing fees revenue rose an annual 46.2 per cent to 26.5m riyals, mainly because of an increase in the number and size of listings, the bourse said.

During the first half of 2022, the total number of companies listed on the main market increased to 215 from 203 in the same period last year as the stock market continued to attract investors.

The number of newly-listed companies on both the main market and parallel market reached 25 in the first half of the year with a total offered value of 14.9bn riyals.

The number of initial public offerings (IPOs) in the first six months of the year in the main market and the parallel market reached 246, Khalid Al-Hassan, group chief executive of the Saudi Tadawul Group, said.

The group recorded net profit after zakat of 278.3m in the first half of the year, a 23.1 per cent decrease on the prior-year period, as operating revenue fell 8.3 per cent and operating expenditure rose 9.8 per cent.