SABIC Q2 net profit plunges on lower contribution from associates

Saudi Basic Industries Corp (SABIC), the world’s fourth-biggest petrochemicals firm, posted a 68 per cent drop in second-quarter net profit on Sunday, citing lower average selling prices and a decrease in the share of contributions from associates and joint ventures.

The results came after Swiss petrochemicals firm Clariant, in which SABIC owns a 25 per cent stake, announced a loss for the first half of the year, hit by charges linked to a European probe over competitive practices, and shelved its joint venture with SABIC.

SABIC said its net profit was SAR2.12bn ($565m) for the quarter ended on June 30, down from SAR6.7bn in the same period a year earlier.

EFG Hermes had projected a net profit of SAR2.67bn.

“The slowdown in global GDP growth coincides with a decline in petrochemical prices due to a significant increase in new supply capacity resulting in lower product prices and margins in key product lines,” said Yousef Abdullah al-Benyan, vice chairman and chief executive of SABIC in a statement.

SABIC said the new capacities in key product lines that pressured its product prices and margins in the first half of 2019 are expected to continue to impact the company’s earnings in the second half of 2019.