Saudi’s SAFCO Posts 7.8% Q2 Net Profit Fall

Saudi Arabian Fertilizer Co (SAFCO) posted a fifth-straight decline in quarterly earnings on Sunday, missing analyst estimates with a 7.8 per cent fall in second-quarter net profit after higher sales failed to make up for lower prices.

The company, part of Saudi Basic Industries Corp (SABIC), one of the world’s biggest petrochemical companies, said it made SAR639 million ($170.4 million) in the quarter, against SAR693 million in the same period last year.

The average forecast in a Reuters poll of nine analysts was net profit of SAR689.2 million.

Like other leading fertiliser producers, SAFCO has been hit by falling prices of urea as China has ramped up output of the nitrogen-rich compound. Average urea prices slumped by $311 a ton in the second quarter, down 15 per cent year on year.

Other petrochemical players in Saudi Arabia have also struggled to achieve earnings growth. Yanbu National Petrochemical (Yansab) missed analysts’ estimates on Sunday with a 8.6 per cent drop in second-quarter net profit – the company’s third successive quarterly decline.

The performance of SAFCO and Yansab are eagerly watched for a steer on results from SABIC, the biggest shareholder in both companies. SABIC reports its earnings this month.

However, Saudi International Petrochemical Co (Sipchem) beat analysts’ forecasts with a 41 per cent jump in second-quarter profit on Sunday, aided by higher profit margins and sales.