Saudi’s SAFCO Says Plant Start-Up Delayed, Trims H1 Dividend

Saudi Arabian Fertiliser Co (SAFCO) said the start of commercial operations at its SAFCO-5 plant had been delayed until the first quarter of next year, while the firm also announced a reduced dividend for the first half of 2014.

The delay in the start-up of the plant, originally scheduled for the third quarter of 2014, was due to construction work falling behind the original timetable, a statement to the Saudi stock market said on Monday.

SAFCO-5 will be one of the largest urea plants in the world once completed, according to the company’s website, with an annual production capacity of 1.1 million tonnes.

Meanwhile, the company – a unit of Saudi Basic Industries Corp (SABIC) – announced in a separate filing a dividend of SAR4 per share for the first half of 2014. This is down from SAR6 per share in the corresponding period of last year, according to Thomson Reuters data.

SAFCO attributed the fall to the company using its own cash to fund the construction of SAFCO-5, rather than taking on bank loans, which kept the firm’s balance sheet free of debt.

The delay would not increase the total cost of building the plant, which had been put at SAR2 billion ($533 million), the first statement said.

The plant is being built by Italian contractor Saipem . Construction began in December 2011 and was expected to take 26 months to complete. However, it is now scheduled to finish in the fourth quarter of 2014, with a three-month trial run of the project planned ahead of commercial start-up, it added.