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Saudi’s SABIC Q4 net profit jumps 48%

Saudi’s SABIC Q4 net profit jumps 48%

The company attributed the profit jump to a lower average cost of sales

Saudi Basic Industries Corp (SABIC), one of the world’s largest petrochemicals groups, reported a 47.7 per cent jump in fourth-quarter net profit on Thursday, at the low end of analysts’ estimates.

SABIC made a profit of SAR4.55bn ($1.21bn) in the three months to Dec. 31, up from SAR3.08bn in the year-earlier period, it said in a bourse statement.

Five analysts polled by Reuters had forecast on average that SABIC would make a quarterly net profit of SAR4.94bn.

The company attributed the profit jump to a lower average cost of sales and lower selling, general and administrative expenses – the result of aggressive cost-cutting that the petrochemical giant conducted in response to low oil prices, which squeezed its profit margins.

SABIC said operating profit surged 67.2 per cent to SAR7.29bn in the fourth quarter while gross profit gained 16.9 per cent to SAR10.6bn.

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.

SABIC said in October it had combined its chemicals and polymers businesses and would spin off its steel unit as part of restructuring efforts.

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