By: Mahmoud Gamal
Dubai – Mubasher: The financial results of transportation sector in the UAE may vary as some companies were impacted by the rising costs of higher oil prices, analysts told Mubasher.
Brent crude’s price surged 20% to reach $57.54 per barrel (pb), while US crude’s grew 12.3% reaching $51.67 pb during the third quarter of 2017.
The profits of transportation sector firms edged up 0.2% to reach AED 265.2 million in Q2-17, compared to AED 264.7 million in Q2-16.
Oil prices continue growth
Transportation companies’ expected results will vary by the end of Q3-17 owing to the difference in activities in the sector, Fadi El-Ghattis, CEO of MindCraft Consultants, said.
The extent of the impact from the rise in oil prices, whether directly or indirectly, will also be reflected on these companies’ results, he added.
Forecasts of the continued rise in oil prices definitely add pressure on companies and costs in firms such as Aramex and Gulf Navigation, the CEO of MindCraft Consultants stated, noting that the latter may also be affected by the diplomatic rift between Qatar and some neighbouring nations.
In June, Saudi Arabia, Egypt, Bahrain, and the UAE cut their diplomatic relations with Qatar on the back of a political dispute.
Air Arabia
Dubai-listed Air Arabia is expected to achieve higher profits during Q3-17 backed by an increase in flights during the summer holidays in 2017, El-Ghattis indicated.
Meanwhile, managing director of asset management at Menacorp Tariq Qaqish said that the rise in the number of travellers in the UAE, especially in Dubai, confirms the positive expectations of Air Arabia’s financial results.
Air Arabia’s expansions during the previous period, especially in Morocco, will push its results higher owing to the varied travel destinations, Qaqish added.
The airline’s CEO Adel Al Ali recently told CNBC Arabia that he expected the company will see strong performance during the summer, confirming that its growth will be stronger by the end of Q4-17.
Air Arabia has added twelve new destinations, the top official has said, forecasting a 35% growth in the size of the company’s fleet by the end of 2017.
Air Arabia’s hedging against the rise in oil prices is one of the positive factors that will support the company’s expected positive results, the managing director of asset management at Menacorp stated.
Mohamed Alabbar and Aramex
Regarding Aramex’s financial results, Qaqish forecast that they may drop on the back of higher costs after oil prices hiked.
Aramex’s financial results will improve during the coming period after renowned businessman Mohamed Alabbar joins its board of directors, the analyst told Mubasher, forecasting that launch of Alabbar’s e-commerce platform Noon.com will boost Aramex’s operations in the coming period.
In September, Aramex approved the appointment of Emaar Properties’ chairman Mohamed Alabbar as board member.
Translated by: Mohamed Hesham Azab
