Biggest chemicals firm says cost squeeze to hit profit this year

Saudi Basic Industries Corp., the world’s largest chemical maker by market value, posted a 33 per cent jump in quarterly profit but expects rising feedstock prices to pressure earnings over the rest of the year.

The Riyadh-based company, known as Sabic, made net income of SAR6.47bn ($1.73bn). The figure was above analysts’ average estimate of just over SAR5bn.

The company, controlled by oil giant Saudi Aramco, said in a statement that pre-tax earnings would “remain flat” this year, with rising sales being offset by higher costs for inputs.

First quarter results were “driven by continued healthy demand for our products, higher oil prices and our diverse global portfolio,” chief executive officer Yousef Al-Benyan said.

Demand for products from plastics to paint has soared in the past year with economies recovering from the coronavirus pandemic. Yet a global supply-chain squeeze has pushed up costs for chemical producers, lowering their margins.

Sabic’s competitors such as BASF and Dow have raised their prices recently amid constraints in procuring raw materials.

The stock of Sabic has climbed 6 per cent this year to SAR123, valuing the company at $98bn.