June 9, 2022

By sector of activity, the evolution of rating revenues highlights two major trends. The first is that the Energy, Mining, Agro-food and Construction sectors show an increase in their turnover boosted by a positive price effect. Revenues from these sectors rose by +49.5%, +114.5%, +31.4% and +38.0% respectively.

The second trend is that the Automobile and Telecoms sectors show declines in their quarterly turnover. The latter fell back by -9.4% and -1.6%.

For the Automotive sector, the decline in revenues is mainly attributed to strong pressure on vehicle inventory levels. On the basis of the capital weight of the various listed sectors, AGR’s analysis generally points to two observations. The first is that 12 listed sectors, contributing 77% to the overall market capitalization, show positive revenue growth at the end of March 2022.

In more detail, these are the sectors Mining (+1,647 MDH; +114.5%), Energy (+3,107 MDH; +49.5%), Construction (+1,158 MDH; +38.0%), Agro -food (+1,397 MDH; +31.4%), Ports (+147 MDH; +18.0%), Mass Distribution (+394 MDH; +15.2%), Real Estate (+111 MDH; +12, 1%), NTI (+65 MDH; +9.0%), Cement (+248 MDH; +8.9%), Banks (+ 854 MDH; +5.2%), Financing (+ 55 MDH; + 4.6%) and finally Insurance (+123 MDH; +1.7%).

The second observation is that the Automobile and Telecoms sectors, which together represent nearly 18% of the stock market capitalization of the listing, recorded a drop in their revenues in Q1-22, of -9.4% (-172 million dirhams) and of -1.6% (-144 MDH) respectively.

Potential risks for the second half of 2022

AGR analysts also point out that the acceleration of inflation in Morocco since the end of 2021 is mainly due to the surge in international commodity prices, and a weak agricultural campaign at the local level. “Inflation in Morocco reached a peak of 5.9% in April 2022 once morest a historic level below 2.0%. Three factors support the price increase during 2022, namely: (1) the lack of visibility on the outcome of the Russian-Ukrainian conflict, (2) the disruption of maritime logistics chains, and (3) the reopening of the economy. China, the impact of which would be visible on global demand”, explains the same source.

“In this context, the average prices of the main energy inputs imported by listed companies show significant increases between Q1-21 and Q1-22. These are Petroleum, Coal and Ethylene, the average prices of which increased by 61%, 240% and 38% respectively over the period studied,” says Attijari Global Research.

Taking into account the spot prices observed at the beginning of June and the additional costs induced by the supply chain, AGR anticipates stronger pressures on input prices. Under these conditions, listed companies should face two major risks from the second half of 2022.

On the one hand, greater pressure on margins following the disposal of inventories built up in recent quarters. Companies whose turnover is generated mainly in Morocco would be the most vulnerable, said the same source. On the other hand, a weakening of local demand which should be felt more from June 2022.

“The consumption of cement, the main barometer of the economy, confirms this feeling. Indeed, year-on-year growth in cement sales shows a marked deceleration, from 14.8% at the end of December 2021 to -5.1% at the end of April 2022.