Business Optimism Index Saudi Arabia – Q2 2009 Saudi Arabia Business Optimism Index – Q2 2009...

Business Optimism Index Saudi Arabia – Q2 2009

Saudi Arabia Business Optimism Index – Q2 2009

Presented by Presented by Dun & BradstreetDun & BradstreetNational Commercial Bank National Commercial Bank


The D&B Business Optimism Index is recognized world over as an indicator which measures the pulse of the business community

Provides insights into the short-term outlook of the business community on investment, sales, profit growth etc

Analysis of major trends, outlook and issues concerning the business units

Widely used by policymakers and investors for assessment of business sentiment

Overtime it gives a composite index which emerges as a leading business indicator of turning points in economic activity

Business Optimism Index


Sample of business units representing the Saudi Arabian economy selected

500 business owners and senior executives across business units surveyed

Conducted during March 2009 for the quarter starting April 2009

Respondents are questioned on their expectations for relevant business parameters

Hydrocarbon sector survey conducted separately

Respondents were also surveyed regarding current business conditions vis-à-vis: investment plans, industry concerns, effects of global financial crisis

Survey


Business Optimism for Q2 2009

Inflationary pressure expected to retreat further

Business units remain cautious about inventory levels

40

27

1625

43 4034

282528

1510

32

63

50

60

32 32

0

20

40

60

80

100

Net Profit Number ofEmployees

Level ofSelling Prices

Level of Stock New OrdersReceived

Volume ofSales

%

0

20

40

60

80

100%

I ncrease Decrease No Change


Demand seen declining

40% business units expect an increase in sales volumes

Volume of Sales and New Orders expectations highest in construction sector

Trade, hotels and transport sector least optimistic about Volume of Sales

New Orders

4450

3743 43

22 22 25 2925

3428

3728

32

0

20

40

60

80

100

Manufacturing,agriculture &

electricity

Construction Finance,I nsurance, Real

Estate &Business Ser

Trade, hotels,transport &

communication

Overall

%

I ncrease Decrease No-Change

Volume of Sales

4347

36 37 40

2723

2832

2830 3035

31 31

0

20

40

60

80

100


electricity




communication

Overall

%



Positive but low profit expectations

40% of all the business units expect increased profitability Construction sector most upbeat about Net Profits expectation Trade, hotels and transport sector continues to display subdued sentiments

42 4637 39 40

2925 3029 2830 29 34 31 31

0

20

40

60

80

100


electricity


Estate & BusinessSer


communication

Overall

%

0

20

40

60

80

100%



New employment plans on hold

Two thirds of the business units hold new hiring plans

60% of the business units expect no change in inventory levels

Construction sector most optimistic about increasing employee count

Number of Employees

27

3728

1927

513 15

8 10

68

5056

7364

0

20

40

60

80

100


electricity




communication

Overall

%


Level of Stock

2315

3225

1611

15 15

60

74

5260

0

20

40

60

80

100


electricity

Construction Trade, hotels,transport &

communication

Overall

%I ncrease Decrease No-Change


Prices set to ease further

Selling Price likely to decline across all sectors

59% of the business units in the finance, insurance and business services sector expect prices to remain at the level of last quarter

15 1914 18 16

273437 34

3848

43

5948 50

0

20

40

60

80

100


electricity


Estate & BusinessSer


communication

Overall

%

0

20

40

60

80

100%



Profitability expectations continue to remain positive

48% of the business units expect Level of Selling Prices to remain flat

Cost of Extraction seen unchanged

Oil and Gas sector

53

35

18 18

3630 2830

17

35

4854

0

20

40

60

80

100

Net Profit Number ofEmployees

Level of SellingPrices

Cost of Extraction

%

0

20

40

60

80

100%

I ncrease Decrease No Change


Impact of global financial crisis

Global financial crisis to affect majority of the business units

A quarter of hydrocarbon respondents see no impact of the crisis

39% of the business units in manufacturing and trade, transport & hotels sector do not expect to be impacted by the crisis

Oil & Gas

60%

25%

15%

Yes No Don’t know

Non Hydrocarbon

51

60

57

53

39

28

30

39

10

12

13

8

0% 20% 40% 60% 80% 100%


electricity

Construction

Finance, I nsurance,Real Estate &

Business Services

Trade, hotels, transport &

communication

Yes No Don't Know


Investment plans of non hydrocarbon sector

Most businesses positive about business expansion 27% of finance, insurance & business services units to undertake

investment in addition to technology Sharp rise in number of units polling for no investments

10

10

27

7

20

16

4

8

7

15

7

2

43

35

44

59

20

24

18

24

0% 20% 40% 60% 80% 100%

Manufacturing, agriculture &

electricity

Construction

Finance, I nsurance, Real Estate &

Business Services


communication

Addition to technology Plant & machinery Workforce Business expansion No investment


68

51

31

46

11

22

18

11

4

6

10

15

9

18

33

17

8

3

8

11

0% 20% 40% 60% 80% 100%

Manufacturing, agriculture &

electricity

Construction

Finance, I nsurance, Real Estate &

Business Services


communication

Price of raw materials Availability of skilled labor Property prices/rentAvailability of finance Others

Manufacturing sector most concerned about rise in raw material prices

33% of units in the services sector apprehensive about availability of finance

Oil & gas sector continues to be concerned about drop in global oil prices

Business concernsNon Hydrocarbon Oil & Gas

58%

40%

2%

Drop in oil prices Rise in cost of operationsNone of the above Availability of skilled laborTransportation costs Transportation costs


Global economic recovery

27

21

24

27

39

32

45

33

34

47

31

40

0% 20% 40% 60% 80% 100%

Manufacturing, agriculture andelectricity

Construction

Finance, I nsurance, Real Estate &Business Services

Trade, hotels, transport &communication

2009 2010 Can't say

Most business units expect global economy to begin recovery in year 2010

Non Hydrocarbon

15%

38%

47%

2009 2010 Can't say

Oil & Gas


Business optimism indices drop for all six parameters

Further easing of inflationary pressure

Business units cautious about inventory levels

Increased number of businesses lean towards no investments

Sentiments dip further in the Hydrocarbon sector

Outlook for Q2 2009


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