01 June 2015

Gulf Industry magazine helps you catch up with the numbers behind economic and industrial developments in the region.


Saudi’s Q2 inflation to be stable

Saudi Arabia’s central bank said it expected stable inflation in the second quarter of this year, with weak global commodity prices offsetting any upward pressure due to seasonal demand.

“Some commodity prices could see an increase in demand as a result of the expected increase in consumer demand to prepare for the season of Ramadan and Eid during the second quarter of 2015,” the central bank said in a quarterly report.

But the central bank added, “The outlook still points to stable inflation locally as a result of a decrease in prices of major commodities globally.”

Saudi consumer prices rose 2.0 per cent from a year earlier in March, the slowest rate since at least September 2012, when the current data series began.



Mena M&A Q1 value rises 9pc to $8.9bn

Announced deal value in Mena (Middle East and North Africa) increased to $8.9 billion in the first quarter of 2015 from $8.2 billion during the same period last year, marking an increase of 9 per cent, a report said.

In Q1 2015, 90 deals were announced as compared with 89 deals in Q1 2014, according to the Q1 Mena M&A update released by EY, a global leader in assurance, tax, transaction and advisory services.
Inbound announced deal value increased from $400 million in Q1 2014 to $2.6 billion in Q1 2015; while domestic announced deal activity value decreased by 48 per cent from $1.7 billion in Q1 2014 to $0.9 billion in Q1 2014.

Outbound announced deal value decreased by 11 per cent from $6.1 billion in Q1 2014 to $5.5 billion in Q1 2015.

Phil Gandier, Mena head of Transaction Advisory Services, EY said: “The Mena M&A market continues to display resilience to the challenging regional geopolitical climate in parts of the region.”

“The pipeline of M&A deals looks robust for the rest of the year,” he added.

More than half of Mena businesses are planning for larger deals in the coming year, compared to 28 per cent who said they would maintain the current transaction strategy, according to the CCB (Capital Confidence Barometer), the update said.

Anil Menon, Mena M&A and IPO leader, EY, said: “Deal flow is looking very healthy, underpinned by the re-emergence of Egypt and the bounce back of other markets that had slowed in recent years.

“This year we are likely to see many more outbound deals as overseas forays are back on the Mena radars. Around one third (34 per cent) of businesses in the region plan to focus on investing in new geographies and markets for organic business growth, compared with just 6 per cent a year ago,” he added.



Regional IT spend tops $211bn

IT spending in the Middle East and Africa grew by 8 per cent in 2014 to reach over $211 billion in 2014, said a forecast.

The IT spending was buoyed by investments in mobility, smart government, big data and the Internet of Things (IoT), said Sidh NC, director of QnA International, quoting a Gartner forecast.

Companies worldwide are redirecting their IT investments in HR technology as they embrace talent management solution, HCM, big data, software-as-a-service (SaaS) systems and mobile applications, said Sidh NC.

“In the days of mobile gadgets and ever changing expectations of employees, technology has emerged as the key driver of this Smart HR evolution. Companies in the region are recognising that HR technology is no longer just about supporting business processes, but more about supporting people and enabling human resources to transform so it can play a more strategic role in the business,” Sidh NC said.



Mobiles yield high value to customers

Mobile technologies are creating immense value for consumers, who value them at 11 to 45 per cent of their income – well above what they pay for the service, a report said.

According to the new report by The Boston Consulting Group (BCG), a global management consulting firm and the world’s leading advisor on business strategy, 33 per cent of consumers would rather accept a 20 per cent reduction in salary than give up their mobile phone.

The study, titled The Mobile Revolution: How Mobile Technologies Drive a Trillion-Dollar Impact, revealed in developed markets, the ubiquitous connectivity makes users’ lives easier through services such as mobile banking, GPS-based mapping, and crowdsourced recommendation apps.

Interestingly, consumers in developed markets value mobile technologies at upward of $6,000 per year, or approximately 12 per cent of their income.

In emerging markets, the numbers tell an even more powerful story. For many consumers, mobile phones are their only “connected” device. It provides the chance to live healthier lives, access educational resources, earn a higher income, and create better living conditions.

For this report, BCG examined the use and benefits of mobile technology in six countries: the US, Germany, South Korea, Brazil, China, and India. The firm surveyed approximately 7,500 consumers across the six countries to quantify the value consumers derive from mobile.



Mumtalakat gross profit surges 65pc

Bahrain Mumtalakat Holding Company, the investment arm of the kingdom, has announced that its full-year results for 2014 reflected another solid financial and operational performance across the group, constituting 38 portfolio companies.

While group revenues for the year were up by 11 per cent to BD1.2 billion ($3.1 billion), direct costs rose by less than five per cent, resulting in a 65 per cent increase in gross profit to BD181.1 million, compared with BD109.4 million in 2013, said a report in the Gulf Daily News, our sister publication.

The revenue growth was primarily due to higher sales reported both by Alba and Gulf Air.

A continuing focus on revenue enhancement and cost control within the group has contributed to a significant increase in operating income by 60 per cent to BD113.1 million from BD70.7 million in 2013.

The overall result was a net profit for the year of BD91.6 million, 11 per cent higher than the previous year of BD82.7 million.

Impairment in the year amounted to BD34.4 million, compared with BD20.9 million in 2013, while net profit before impairment grew by 22 per cent.

Total assets were BD4.2 billion.

Gulf Air continued to reduce its operating losses as a result of its restructuring initiatives, the group said. Alba continued to perform well, growing revenues and profits, and benefiting both from improved operating efficiencies and higher LME prices.

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