Business Optimism Index Saudi Arabia – Q1 2009 usiness Optimism Index Saudi Arabia Q1 2009 19th January, 2009 Business Optimism Index Saudi Arabia Q1 2009

Business Optimism Index Saudi Arabia – Q1 2009

Business Optimism Index usiness Optimism Index Saudi Arabia Q1 2009Saudi Arabia Q1 200919th January, 200919th January, 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 is selected

500 business owners and senior executives across business units surveyed

Conducted between November 16th and November 25th for the quarter starting January 2009

Respondents are questioned on their expectations for relevant business parameters

Hydrocarbon sector survey conducted separately Also surveyed respondents regarding current business

conditions vis-à-vis: investment plans, industry concerns, effects of global financial crisis

Survey


Overall business outlook upbeat

Demand outlook for the quarter remains firm

Most business units expect Net Profits to increase

Inflationary pressures to ease

61

47

32 30

57 59

8

33

18 20 2114

45

35

52

23 2024

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

%

Increase Decrease No Change


Buoyant demand drives business sentiments

59% business units expecting an increase in sales volumes

New Orders expectations high across all sectors

Construction and Real Estate sector set to defy tight financial condition

Volume of Sales

6067

56 5559

21 19 1925

211914

2520 20

0

20

40

60

80

100

Manufacturing,agriculture &

electricity

Construction Finance, Insurance,Real Estate &Business Ser

Trade, hotels,transport &

communication

Overall

%

Increase Decrease No-Change

New Orders

58 56 6055 57

18 19 1724

2024 26 23 21 23

0

20

40

60

80

100


electricity

Construction Finance, Insurance,Real Estate &Business Ser


communication

Overall

%



Profits expectations high

Profitability expectations high across sectors Construction sector expects steady growth Trade, hotels & transports sector least upbeat

6166

6157 61

2520 21

2924

14 14 17 14 14

0

20

40

60

80

100


electricity

Construction Finance,I nsurance, Real

Estate &Business Ser


communication

Overall

%

0

20

40

60

80

100%

I ncrease Decrease No-Change


Cautious about costs

New job creation to pace down

Business units expected to maintain inventory at last quarter levels

Finance sector to create most new job opportunities

Level of Stock

35

11

34 3019

6

2318

45

83

4352

0

20

40

60

80

100


electricity

Construction Trade, hotels,transport &

communication

Overall

% Increase Decrease No-ChangeNumber of New Employees

4349

56

45 47

713

5 8 8

50

39 3948 45

0

20

40

60

80

100


electricity

Construction Finance,Insurance, Real



communication

Overall

%



Downward pressure on prices

Selling Price expectations diminish

Real Estate prices expected to stay at last quarter levels

3026

36 36 3238

29 29 31 3332

46

35 33 35

0

20

40

60

80

100


electricity

Construction Finance,I nsurance, Real



communication

Overall

%

0

20

40

60

80

100%

I ncrease Decrease No-Change


Sentiments positive despite sharp drop in global crude oil prices

Profitability expectations high

Significant employment growth in the sector

Oil & Gas sector

65 65

55

43

1318 20

33 33

1825

15

0

20

40

60

80

100

Net Profit Number ofEmployees

Level of SellingPrices

Cost of Extraction

%

0

20

40

60

80

100%

Increase Decrease No Change


Impact of global financial crisis

Most businesses feel the pinch of global financial crisis

Oil & Gas sector to be most affected

Finance & Construction sector resilient in these testing times

Non Hydrocarbon

53

46

42

59

35

47

50

37

11

7

8

4

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

Manufacturing,agriculture and

electricity

Construction

Finance,I nsurance, Real

Estate &


communication

Yes No Don't Know

Oil & Gas

80%

15%5%

Yes No Don’t know


Non hydrocarbon sector investment plans

Only few business units steer away from any new investments next quarter

Business expansion to be the top priority Finance and Real Estate sector to focus on investments in technology Manufacturing sector planning to invest in additional plant & machinery

22

34

41

18

30

14

13

13

11

9

7

7

32

34

37

59

5

9

4

2

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


electricity

Construction

Finance, Insurance,Real Estate &

Business Services


communication

Addition to technology Plant & machinery w orkforce

Business expansion No investment


Escalation in costs considered a major roadblock

Availability of skilled labour a significant concern

Oil & gas sector most concerned about drop in oil prices

Business concerns

75

63

45

50

12

17

24

17

2

6

8

5

4

7

15

16

7

7

8

12

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


electricity

Construction

Finance,I nsurance, Real

Estate &


communication

Price of raw materials Availability of skilled laborProperty prices/rent Rising cost of debtOthers

Non Hydrocarbon

25%

15%50%

10%

Rise in cost of operations Availability of skilled laborDrop in oil prices Others

Oil & Gas


Positive business sentiments despite financial crisis

Sales and profits levels to increase

Easing inflationary pressure

New Employment opportunities to pace down

New investments planned in Business expansion

Outlook for Q1 2009


THANK YOU

Documents

Business Optimism Index Saudi Arabia – Q1 2009 usiness Optimism Index Saudi Arabia Q1 2009 19th January, 2009 Business Optimism Index Saudi Arabia Q1 2009