Petrochemicals giant SABIC posts 85% second-quarter profit leap

Saudi Basic Industries Corporation (SABIC), one of the world’s biggest petrochemical companies, reported a close to 85 per cent jump in second-quarter net profit on Thursday, helped by higher margins and accounting changes.

SABIC reported a net profit of $581.04m (SAR2.18bn) for the three months to June 30, beating analyst expectations of SAR904.25m, LSEG data showed.

Along with improved margins, SABIC said profit was higher partly due to non-cash benefits resulting from new regulations on the Islamic tax zakat.

SABIC, which is 70 per cent owned by oil giant Aramco, said its long-term focus would remain on “strategic portfolio optimisation” and restructuring underperforming assets.

The sale of steel business Hadeed to the Public Investment Fund was completed on June 1, SABIC said.

SABIC previously said the Hadeed sale had an enterprise value of $3.3bn. The final sale price will be disclosed at a later date, SABIC has said.

Portfolio optimisation is a priority to drive better returns and reallocate capital to higher-margin opportunities, SABIC said.

Revenue in the quarter rose 5 per cent from a year prior to SAR35.72bn. The company attributed the increase to better average selling prices and a slight increase in sales volume.

SABIC kept its projection for capital expenditure this year unchanged at $4bn to $5bn.

Since Aramco bought a majority of SABIC in 2020 for $69.1bn, $2.08bn of “captured value” has been realised, SABIC said. That includes $162m in synergy in the second quarter.

Aramco expects between $3bn to $4bn in annual synergy from the acquisition by next year, the oil giant said in the prospectus for its secondary share sale last month.

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