Saudi’s Sabic sees profit surge amid global chemical boom

Saudi Basic Industries Corp. (SABIC), the world’s biggest chemicals maker by market value, saw profit surge in the second quarter as the economic recovery from the coronavirus pandemic boosted products from plastics to paint.

The Riyadh-based company, controlled by state oil producer Saudi Aramco, made net income of SAR7.64bn ($2bn), the highest quarterly figure in almost a decade and up around 60 per cent from the first three months of the year.

Revenue climbed 72 per cent year-on-year to $11.3bn.

Chemicals firms are experiencing a steep rise in earnings. Global demand for packaging and for flooring and roofing materials has increased markedly this year amid economic re-openings. The world’s biggest chemical maker by sales, Germany’s BASF, recently raised its full-year profit forecasts.

Our strong financial performance in Q2 2021 demonstrated the success of our transformation program, which boosted our ability to capitalize on improving external conditions and helped us continue to deliver #ChemistryThatMatters #SABIC pic.twitter.com/bNsIIPFiG8

— SABIC I سابك (@SABIC) August 5, 2021

Prices of chemical ingredients like polyethylene and polyvinyl chloride used to make plastics, solvents and other construction materials have climbed to records. The industry is also still recovering from a massive supply crunch following February storms in the US that caused supply outages.

Sabic’s said its margins were boosted by “higher product prices and sales volumes, supported by a healthy demand and tight supply conditions for most key products.”

The company, which also makes steel, prices for which have hit record highs, expect margins to moderate but “remain healthy” over the rest of the year.

“We see there is still healthy demand on our core products and we expect the second half will remain more or less similar to the first half of 2021,” chief executive officer Yousef Al-Benyan told reporters in Riyadh.

He said Sabic had no plans to sell debt soon.

Sabic’s board in June recommended a cash dividend of SAR1.75 per share for the first half of 2021, up from SAR1.50 a year earlier, when the company made a loss. The stock has risen 22 per cent since the end of 2020, outperforming competitors such as BASF and Dow.

Saudi Arabia expects chemical makers like Sabic – which has a market capitalisation of $99bn — to form the basis for new manufacturing and consumer-goods industries as it seeks to reduce its reliance on oil.