Saudi petrochemical group SABIC reports 62% plunge in profits

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Saudi Basic Industries Corporation (SABIC), one of the world’s biggest petrochemical companies, reported a 62 per cent drop in first-quarter net profit on Wednesday, which it partially attributed to a decline in revenue.

SABIC reported net profit of 250 million riyals ($66.66 m) for the three months to March 31, down from 660 million riyals a year earlier, and missed a mean estimate of 440 million riyals, based on LSEG data.

“The decrease in net profit is attributed to lower revenues, lower results from associates and joint ventures in addition to losses from discontinued operations,” SABIC said.

The company reported quarterly revenue of 32.7 billion riyals, down 10.3 per cent year on year, which it said was due to a decline in the average selling prices by 3 per cent and reduction in sales quantities by 7 per cent.

“The first quarter of this year has presented global and regional improvement in prices of major petrochemical products mainly driven by demand improvement and logistic disruption,” said CEO Abdulrahman Al-Fageeh.

“The market has yet to grow into the recent run of capacity investments and this overcapacity continues to place significant pressure on our industry. The gap between excess supply and moderated demand growth is set to remain in place for 2024.”

SABIC said it would maintain a “disciplined approach” in managing its CAPEX (capital expenditure), and is projecting a spending range of $4 to $5bn for 2024.

On a quarterly basis, revenue fell 7 per cent from the fourth quarter of 2023, on lower sales and higher selling prices.

SABIC had a net loss of 2.77 billion riyals in 2023, due to discontinued operations.