Big Saudi firms to pay bonuses

RIYADH: Several of Saudi Arabia’s largest listed companies said they would pay out hundreds of millions of dollars in bonuses, days after Custodian of the Two Holy Mosques King Salman ordered a handout to Saudi state employees to mark his accession.
“I expect almost all Saudi listed and non-listed companies to make such payments, which will have a short-term impact on their operating profitability,” said Shakeel Sarwar, head of asset management at Securities & Investment Co. in Bahrain.
“But the beneficiaries of these payouts will spend the money and that should help consumer stocks plus banks, which might see retail loans increase. Overall, this should benefit the economy.”
Saudi Electricity Co. will distribute SR545 million ($149 million) among its Saudi employees, it said in a bourse statement. Bonuses will not exceed SR50,000 per staff member.
Saudi Telecom Co. will pay an extra SR395 million to its Saudi employees, it said in a similar filing, adding that the payout would be recorded in its first-quarter earnings.
Saudi Basic Industries Corp. (SABIC), the Gulf’s biggest list company and one of the world’s top petrochemical producers, will pay two months’ basic salary to Saudi employees and has recommended its subsidiaries and affiliates do likewise, according to an internal memorandum seen by Reuters and confirmed by an official source.
SABIC’s units include Saudi Arabia Fertilizer Co, Saudi Kayan Petrochemical Co. and Yanbu National Petrochemical Co.
Southern Province Cement revealed it would pay two months’ salary to Saudi employees, plus half a month’s pay to non-Saudis.
Several of the country’s largest banks will also pay two-month bonuses, according to financial news website Argaam. The government owns major stakes in National Commercial Bank, Samba Financial Group and Riyad Bank, Reuters data shows.
Last week, King Salman ordered the immediate payment of two months of bonus salary to all state employees and pension to retired government workers.
King Salman’s announcement did not give a monetary figure, but analysts said the payout to state employees could be worth some SR70 billion, while additional handouts to pensioners, students and others could make total state spending much larger.
“Saudi companies donít pay income tax, so these occasional one-off payments can be construed as indirect taxes for the benefit of the overall society and population,” said Sarwar.