Saudi’s Tasnee Swings To Q1 Net Loss

Saudi Arabia’s National Industrialization Co (Tasnee) said it swung to a first-quarter net loss on Monday that the petrochemical producer blamed on lower sales prices and adverse foreign exchanges hedging contracts at a subsidiary.

Tasnee made a net loss of SAR332.5 million ($88.7 million) in the three months to March 31, according to a filing to Riyadh’s bourse. This compares with a profit of SAR320.8 million in the same period a year ago.

SICO Bahrain and NCB Capital had forecast Tasnee would make a quarterly net profit of SAR150 million and SAR151 million respectively.

Tasnee said sales volumes rose, but lower sales prices meant it swung to a quarterly loss. Petrochemical product prices are closely tied to oil prices, which have slumped since mid-2014. Saudi producers also benefit from subsidised energy and feedstock costs, so lower crude prices compress their margins.

The company’s expenses also rose due to foreign exchange hedging and derivatives contracts transacted by a subsidiary, Tasnee said without providing any details.

In January, Tasnee signed a SAR1.2 billion ($319.4 million) Islamic loan that it will use to part-fund buying a further stake in its subsidiary Cristal.