2024 Middle East Working Capital Study

Transforming Middle East business resilience: Unlocking value through strategic working capital management

Executive summary

Middle East businesses demonstrated strong growth in 2023, with a combined revenue increase of 6.2% year-on-year (see Figure 1). This robust performance was largely driven by the energy sector and continued strategic investment focused on the UAE and the Kingdom of Saudi Arabia by private equity and sovereign wealth funds. Reflecting this positive market landscape, 73% of Middle East respondents in our latest 2024 CEO survey expect the region’s growth to continue.

In fact the region’s M&A market also recorded remarkable resilience, as seen in our 2024 TransAct Middle East report, leading to a relatively active deal market compared to other regions that have been more susceptible to higher interest rates and recessionary fears.

Based on the latest results, our study highlights some key findings noticed across 450 publicly-listed and private companies and covers five years of key working capital trends from 2019 to 2023, using data sourced from Capital IQ and analysed by PwC. 

Key Findings:

“In the dynamic economic landscape of the Middle East, effective working capital management is crucial. Optimising working capital not only unlocks significant value and enhances liquidity but also strengthens resilience against market volatility. By focusing on sustainable working capital improvements, businesses can secure their financial stability, support growth initiatives, and pave the way for long-term success.”

Mo Farzadi
Business Restructuring Services Leader,
PwC Middle East

Working capital trends

Average working capital performance, measured as Net Working Capital (NWC) days, improved from 121 days in 2020 to 108 days in 2022, as companies increased efficiency across all working capital cycles. 

However, this trend was slightly undermined in 2023, with an average year-on-year slight deterioration in NWC days across the survey of 0.5 days. Small positive and negative movements were observed across the main cycles.

The improvement in NWC days since 2020 is primarily due to a reduction in the average DSO). In 2023, DSO improved again by 0.7 days year-on-year, but this was offset by a reduction of 1 day in the DPO. The average inventory performance or DIO remained largely unchanged in 2023.

Despite this trend, the average short-term to long-term debt ratio across the study is still above pre-pandemic levels. The key to reducing the short-term debt burden is to improve the overall efficiency of the working capital cycle to reduce the dependency on external financing. Cash released as well as the associated debt financing costs eliminated, could be used in turn to provide returns to shareholders or to reinvest in the company. 

The case for implementing sustainable working capital improvements

Many Middle East companies are continuing to improve their working capital efficiency after a general deterioration in their performance during the pandemic. However, there is still too much dependence on short-term actions such as stretching suppliers, targeted collection efforts or liquidating inventories. These measures often do not deliver lasting working capital efficiencies as they do not address the internal process inefficiencies or system limitations that are driving the underlying working capital performance.

Contact us

Mo Farzadi

Mo Farzadi

Partner, Debt, Capital & Restructuring Advisory, PwC Middle East

Tel: +971 4 304 3228

Anthony Manton

Anthony Manton

Partner, Business Restructuring Services, PwC Middle East

Tel: +971 04 304 3100

Peter Mayrs

Peter Mayrs

Partner, Business Restructuring Services, PwC Middle East

Tel: +971 4 304 3100

George Kakos

George Kakos

Partner, Debt & Capital Advisory, PwC Middle East

Tel: UAE: +971 56 682 0631 | KSA: +966 56 961 0097

Dan Georgescu

Dan Georgescu

Business Restructuring Services, Director, PwC Middle East

Tel: +971 5 6418 9776

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