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Saudi’s SABIC Q1 net profit drops 38%, cites lower selling prices

Saudi’s SABIC Q1 net profit drops 38%, cites lower selling prices

The company made a net profit of SAR3.41bn ($909m) in the three months to March 31, down from SAR5.51bn last year

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Saudi Basic Industries Corp (SABIC), the world’s fourth-biggest petrochemicals company, reported a 38 per cent drop in first-quarter net profit due to lower average selling prices, missing analysts’ expectations.

SABIC made a net profit of SAR3.41bn ($909m) in the three months to March 31, down from SAR5.51bn in the year-earlier period, the company said in a bourse statement on Sunday.

Analysts expected SABIC to make a net profit of SAR3.98bn in the first quarter, according to the average of estimates of five analysts polled by Refinitiv.

SABIC said average prices decreased by 8 per cent quarter-on-quarter, driven by slowing global demand, a slow start to the year and relatively high level of inventories.

It expected SABIC’s performance to be in line with trends in the global petrochemical industry, even though it cautioned that global economic growth will be lower this year.

The company’s results are closely tied to oil prices and global economic growth because its products – plastics, fertilisers and metals – are used extensively in construction, agriculture, industry and the manufacturing of consumer goods.

Saudi national oil giant Aramco last month reached an agreement with the Public Investment Fund to buy its controlling stake in SABIC for $69.1bn.

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