Saudi Basic Industries Corporation (Sabic), the Middle East's biggest petrochemicals firm, reported a five-fold increase in third-quarter net profit on the back of higher average selling prices.
Net profit for the three months to the end of September surged to 5.59 billion Saudi riyals ($1.5bn) the company said in a statement on Thursday to the Tadawul stock exchange, where its shares trade. Revenue rose 29.3 per cent to 43.7bn riyals during the period.
“Sabic’s healthy financial performance during third quarter of 2021 marked a continuation of our recovery from the impact of Covid-19, albeit at a lower level than our exceptionally strong performance during the third quarter,” Yousef Al-Benyan, vice chairman and chief executive of Sabic, said.
The company's net profit was also boosted by an increase in its share of results and joint ventures, it said in the filing.
Manufacturers of chemicals like Sabic have benefitted from an overall rise in demand for chemicals and feedstocks as economic activity ramps up amid a relaxation of movement curbs and a fall in infections globally.
Sabic's income from operations rose 266 per cent during the third quarter to reach 7.70bn riyals, the company said.
But buoyant oil prices, which are at multi-year highs, are also increasing costs for the sector, which uses crude oil and its derivatives as feedstock.
Sabic expects "a moderation in margins in the third quarter due mainly to rising feedstock costs, which offset the increase in average sales prices”, Mr Al-Benyan said.
The company swung to a net profit of 18.1bn riyals during the first nine months period compared to a loss of 2.18bn riyals during the same period last year due to higher prices. Revenue rose 47 per cent to 123.6bn during the period.
Sabic, which is 70 per cent owned by Saudi Aramco, said that it has achieved value creation worth $350 million from its deal with Aramco.
The company also said it began commissioning activities for the start of its petrochemicals joint venture in the US Gulf Coast.
"This project supports Sabic’s global growth strategy, and its aim to diversify its feedstock sources and strengthen its petrochemical manufacturing presence in North America,” Mr Al-Benyan said.
Earlier this week, Sabic said it aims to be carbon neutral by 2050. The company said it plans to cut its greenhouse emissions by 20 per cent by 2030 after its majority shareholder Aramco pledged to achieve an ambitious target of net-zero carbon emissions by 2050 on Saturday.
In a separate statement, Sabic said it will invest nearly £1 billion ($1.37bn) at its Teesside unit in northeast England to decrabonise its operations.
