Sabic swings to surprise first-quarter loss amid macroeconomic uncertainty

Company reported a loss of $320 million, its second straight quarterly drop in earnings

Chemicals firm Sabic has reported poor earnings for the past six months on higher prices from the oil firms it buys feedstock from. Reuters

Saudi Basic Industries Corporation (Sabic), the Middle East's biggest petrochemicals company, swung to a loss in the first quarter, a second quarterly drop in income in a row as feedstock prices rose amid continued global macro economic uncertainty.

The company posted a net loss for the three months to end-March of 1.2 billion Saudi riyals ($320 million), compared with a net profit of 250 million riyals during the same period last year, it said on Sunday in a filing to the Tadawul stock exchange, where its shares are traded.

The quarterly earnings is below analysts’ estimates, who forecast a profit of 699 million riyals. Sabic also missed on revenue and earnings per share, according to Bloomberg.

The company, which had also reported a net loss of 1.89 billion riyals in the final quarter of 2024, said rise in feedstock prices also dented income.

Revenue during the latest quarter, however, rose by about 6 per cent annually to 34.6 billion riyals on the back of “increase in the sales volume partially offset by lower average selling prices”, the company said.

During the first quarter, “the global gross domestic product growth rate was 2.97 per cent, reflecting continuing macroeconomic uncertainties,” Abdulrahman Al Fageeh, chief executive of Sabic, said.

“The manufacturing Purchasing Managers’ Index (PMI) growth remained weak throughout the quarter, indicating business pessimism.”

The global economy is facing headwinds as President Donald Trump's push to put heavy tariffs on trading partners across the globe stokes fear of a full-blown trade war. The disruption in global trade will severely dent economic growth, with some analysts even projecting a global recession.

Last month, the International Monetary Fund lowered 2025 growth forecast for the world economy, citing a radical change in trade policies led by Mr Trump's tariff regime.

Sabic said its quarterly earnings reflect the rise in feedstock prices.

The petrochemicals producer said it received a notification from Saudi Aramco earlier this year to increase the feedstock prices.

The financial impact of that rise in prices is estimated to be equivalent to about 1 per cent of the company's annual cost of sales.

“Looking ahead, we remain focused on long-term value creation through operational excellence, transformation, and selective growth,” Sabic said.

“We continue to manage our capital investment with discipline, projecting an expenditure range of $3.5 billion to $4 billion for 2025.”

Sabic share prices were down 2.12 per cent at 3.19pm UAE time on Sunday.

The company also said its projects are progressing according to plan, including the Petrokemya MTBE plant and Sabic Fujian complex.

Last year, Sabic announced investments worth $6.4 billion in China's Sabic Fujian petrochemical complex as part of its expansion plans in the world's second largest economy.