From All-Time High in 2022 to Lowest in a Decade: Companies’ Profits Plummet by 60% to $155 Million

From All-Time High in 2022 to Lowest in a Decade: Companies' Profits Plummet by 60% to $155 Million

Friday, 29 March 2024

Diverse Earnings Trends Among Sectors: Investment Sector Suffers Most, Industry Least Affected, with Services Surging Ahead as the Top Performer

Nablus, 27/3/2024

The Palestine Exchange (PEX) received preliminary financial statements for the fiscal year 2023 from 47 listed companies out of 49. However, the Palestinian Electric Company that operates in Gaza and Palaqar for Real Estate Development & Management have failed to disclose data.

Preliminary financial data indicate that 36 companies have earned profits, while the remaining 11 companies have recorded losses, that are Arkaan Real Estate (ARKAAN), Palestine Development and Investment (PADICO), Palestine Real Estate Investment (PRICO), Palestine Investment & Development (PID), Safa Bank (SAFABANK), National Aluminium and Profile Company (NAPCO), Jerusalem Real Estate Investments (JRI), Sanad Construction Resources Company (SANAD), Arab Hotel Company (AHC), Ibn Sina Specialized Hospital (ISH), and the National Insurance Company (NIC).

The data also indicated that a total of 38 companies among those disclosed, witnessed a decline in their performance during the same period, while the rest 9 companies showed an improvement in their results for the year 2023. These include Jerusalem Pharmaceuticals (JPH), National Carton Industry (NCI), Palestine Poultry (AZIZA), Palestine Plastic Industries (LADAEN), Amlak Real Estate Investment and Trade (AMLAK), Palestine Investment & Development (PID), Arab Investors (ARAB), United Global Insurance (UGI), and Ibn Sina Specialized Hospital (ISH).

According to the preliminary financial data received, the total profits earned for the year 2023 amounted to approximately $155 million, marking a notable decrease of 60% compared to the prosperous year of 2022. In 2022, profits soared to historic highs, reaching approximately $407 million, a milestone unprecedented in the history of the Palestine Exchange. The year 2021 also witnessed commendable profits, totaling around $374 million, while in 2020, amidst the peak of the coronavirus pandemic, profits stood at $207 million. It's worth noting that the cumulative annual profit values of listed companies haven't reached such levels since 2010, when they amounted to $185 million with 40 Listed companies.

Profitable companies constituted approximately 77% of the total number of disclosed companies, amounting to approximately $213 million, reflecting a decrease of 46%. Meanwhile, the value of losses amounted to $58 million, marking a significant increase of 639%.

The investment sector witnessed the most substantial decline in profit value, plummeting by approximately 129%, resulting in losses totaling $22 million. Next in line, the banking sector experienced a significant profit decline of 60%, amounting to $55 million. Similarly, the insurance sector saw a decrease of 51%, generating profits of $11 million, securing the third position. Meanwhile, the services sector ranked fourth in terms of decline, experiencing a 29% decrease but still yielding the highest profits of $88 million. Lastly, the industrial sector saw an 18% decrease, generating profits of $33 million.

The top five most profitable companies for the current year are ranked as follows: Palestine Telecommunications Company (PALTEL) ($61 million), Arab Palestinian Investment Company (APIC) ($19 million), Bank of Palestine (BOP) ($16 million), Oreedoo Palestine (OREEDOO) ($16 million), and the National Bank (TNB) ($14 million).

Commenting on these results, Mr. Samir Hulileh, the Chairman of the Palestine Exchange, emphasized that the exchange accurately mirrors an economy grappling with challenging and unprecedented circumstances. He attributed this to the complex political landscape stemming from aggression on the Gaza Strip and its ramifications on the West Bank, including closures, freezing of clearance revenues, and layoffs of Palestinian workers. These factors have collectively fueled a surge in unemployment rates, reaching historic highs.

He added, "It has become increasingly clear that this aggression targets all aspects of Palestinian life, leading to severe repercussions for the securities sector, a vital pillar of the local economy comprising various components and listed companies across diverse sectors." He noted that the market's performance remained on its expected course until the final quarter of 2023. However, during this period, the ongoing aggression significantly affected operational performance and consequently, company profits, exacerbating the impact on all facets of life.

Hulileh further emphasized that the impact of the aggression and its repercussions extended to liquidity in the market as well, reaching significant levels. This was accompanied by the continuous decline of the Al-Quds Index, which has recorded a decrease of 17% so far.

He concluded by highlighting the Palestine Exchange's ongoing strides in its operations and the achievement of its goals as per the established plans. This includes the expansion of the market, the listing of new companies, and the introduction of innovative instruments aimed at bolstering the national economy. This entails collaborative efforts with all listed companies to navigate the sector's challenges caused by the aggression and contribute to reconstruction endeavors while mitigating future impacts. He also noted that numerous profitable listed companies have commenced announcing recommendations to their general assembly's regarding the distribution of cash and stock dividends to shareholders.