The Market Between Energy Dominance and Consumer Pressure: A Review of Sector Earnings

The aggregate financial results of the sectors listed on the Saudi Exchange recorded strong and tangible growth during the second quarter of 2026. Total net earnings increased by 38.5% to SAR 159.7 billion, compared with SAR 115.3 billion in the corresponding quarter of 2025, representing an absolute increase of SAR 44.4 billion.

This growth was largely driven by the exceptional performance of the Energy sector, alongside the positive turnaround in the Materials sector and the continued resilience of the Banking sector. The analysis covers 242 listed companies across various economic sectors.

First: Leading Sectors and Highest Contributors to Earnings

1. Energy Sector — Market Share: 79.5%

• Number of companies: 6
• Financial performance: The sector generated net earnings of SAR 127.0 billion, compared with SAR 84.8 billion in Q2 2025, representing strong growth of 49.7%, or an increase of SAR 42.2 billion.
• Leading company: Saudi Aramco remains the primary earnings driver for both the sector and the broader market. The company benefited from operational efficiency and relatively stable global oil prices, recording a 41.9% increase in net income to SAR 121.5 billion, compared with SAR 89.7 billion in the corresponding period. This performance was supported by revenue growth of 19% to SAR 450.8 billion, driven by an improvement in average global oil prices.

2. Banking Sector — Market Share: 7.6%

• Number of companies: 10
• Financial performance: Sector earnings increased to SAR 12.1 billion, compared with SAR 11.4 billion, representing growth of 6.1%, or an increase of SAR 689 million.
• Leading companies: Al Rajhi Bank and Saudi National Bank, supported by growth in financing portfolios, lower credit-loss provisions, and continued expansion of digital banking services.

3. Utilities Sector — Market Share: 3.3%

• Number of companies: 6
• Financial performance: The sector generated earnings of SAR 5.3 billion, compared with SAR 6.0 billion, representing a decline of 12.0%, equivalent to a decrease of approximately SAR 720 million.
• Leading companies: Saudi Electricity Company and ACWA Power. The sector was affected by higher financing costs and operating expenses associated with infrastructure projects.

4. Telecommunications Sector — Market Share: 3.0%

• Number of companies: 3
• Financial performance: The sector recorded earnings of approximately SAR 4.7 billion, compared with SAR 4.8 billion, representing a slight decline of 1.1%.
• Leading company: stc Group maintained relatively stable results, supported by growth in its business segment, data centers, and value-added services.

Performance of Sectors Listed on the Saudi Exchange — Q2 2026 vs. Q2 2025

SAR million

Second: Structural Shifts — From Losses to Profitability

Materials Sector — 19.0% of Total Number of Listed Companies

• Financial performance: The sector, comprising 46 companies, successfully turned around from aggregate losses of SAR 588 million in Q2 2025 to net earnings of SAR 1.808 billion in Q2 2026, representing a positive change of SAR 2.395 billion.
• Leading companies: SABIC and Ma’aden. The recovery in demand for certain petrochemical and mining products, together with improved cost efficiency, contributed significantly to this turnaround.

Transportation Sector

The sector turned around from losses of SAR 341 million in Q2 2025 to profits of SAR 156 million in Q2 2026, representing a positive change of SAR 497 million.

Third: Underperforming and Earnings-Pressured Sectors

• Media & Entertainment: Recorded the largest deterioration, shifting from a profit of SAR 108 million to a loss of SAR 475 million, representing a decline of 539.4%.
• Consumer Staples Retailing & Distribution: Earnings declined by 38.2% to SAR 275 million, compared with SAR 446 million.
• Health Care: Recorded a relatively modest decline of 4.4%, with earnings reaching SAR 1.292 billion.

Conclusion

1. Earnings Concentration Risk

The Saudi market continues to exhibit a high degree of earnings concentration. The Energy sector alone accounts for approximately 80% of total market net earnings, meaning that movements in energy prices can have a direct and decisive impact on the overall direction of aggregate market earnings.

2. Resilience of the Banking Sector

The Banking sector continues to provide a solid pillar of support for earnings growth, accounting for more than 7.5% of total market earnings, while maintaining stable and sustainable growth rates.

3. Recovery in Industrial Sectors

The turnaround of the Materials sector into profitability represents a positive signal of improved structural resilience among major companies and their ability to overcome pressures related to raw-material prices.

4. Operational Challenges

Consumer-oriented sectors, Utilities, and Media & Entertainment continue to face pressure on profit margins as a result of changes in domestic consumption patterns, rising operating expenses, and higher financing costs.

Saudi Exchange Announces the Reclassification of 10 Listed Companies Under the GICS Standard

The Saudi Exchange (Tadawul) announced the reclassification of 10 listed companies across the Main Market and the Parallel Market (Nomu) in accordance with the Global Industry Classification Standard (GICS).

The changes became effective at the start of trading on Sunday, September 13, 2026. A new sector was also introduced on the Nomu Parallel Market under the name Technology Hardware & Equipment.

The reclassification affected four companies on the Main Market and six companies on the Nomu Parallel Market, as follows:

Main Market — 4 Companies

• Jabal Omar Development: Consumer Services
• Taiba Investments: Consumer Discretionary
• Ayyan Investment: Food Production
• Fawaz Abdulaziz Alhokair Company (Fawaz Alhokair/Fawaz Holding): Consumer Discretionary Retailing & Distribution

Parallel Market (Nomu) — 6 Companies

• Hodhod Gulf: Capital Goods
• Maintenance Machines: Consumer Discretionary Retailing & Distribution
• Anmat Technology: Application & Technology Services
• National Panels: Technology Hardware & Equipment — new sector
• Multi Business: Capital Goods
• Al-Fakhera for Tailoring: Consumer Discretionary Retailing & Distribution

Global Industry Classification Standard (GICS) in the Saudi Financial Market

The Saudi Exchange adopts the Global Industry Classification Standard (GICS), developed by S&P Dow Jones Indices and MSCI. The framework consists of four structural levels:

1. Sectors
2. Industry Groups — the level used for the classification and calculation of Saudi market sector indices.
3. Industries
4. Sub-Industries

Importance of GICS for the Saudi Market

• International comparability: Facilitates comparisons between the performance of Saudi companies and their global peers.
• Periodic reclassification: Keeps classifications aligned with changes in companies’ operating activities and primary sources of revenue.
• More accurate indices: Enables investors and investment funds to assess sector-specific risks and returns with greater precision.