Sabic's first-quarter profit surges 33% on higher revenue

Middle East's biggest petrochemicals company reports net income of $1.73bn

Sabic's revenue in the first quarter rose 40 per cent to 53 billion Saudi riyals. AFP

Saudi Basic Industries Corporation (Sabic), the Middle East's biggest petrochemicals company, reported a 33 per cent jump in first-quarter profit after revenue rose on higher average selling prices and volumes.

Net profit after zakat and tax for the three months to the end of March climbed to 6.47 billion Saudi riyals ($1.73bn), Sabic said on Thursday in a statement to the Tadawul stock exchange, where its shares are traded.

Revenue during the period rose 40 per cent to 53bn riyals.

“Sabic’s first-quarter results demonstrated strong performance, driven by continued healthy demand for our products, higher oil prices and our diverse global portfolio,” said vice chairman and chief executive Yousef Al-Benyan.

Oil prices have increased by more than 60 per cent from last year, supported by supply concerns caused by Russia’s military offensive in Ukraine.

Brent, the global benchmark for two thirds of the world's oil, is up more than 30 per cent since the start of this year, after falling from a 14-year high of about $140 a barrel in the middle of March.

“In 2022, Sabic will remain focused on delivering its growth strategy, achieving operational resilience and meeting our ESG commitments while, at all times, maintaining a strong balance sheet,” Mr Al-Benyan said.

Sabic is majority owned by the world’s largest oil-exporting company, Saudi Aramco, which acquired a 70 per cent stake in the company in 2020 for $69bn.

The petrochemicals business said it has completed the purchase of Clariant’s 50 per cent stake in Scientific Design, which gives it full ownership of the company.

Sabic's average sales prices in first quarter increased 3 per cent, compared with the fourth quarter of 2021. Sales volumes during the reporting period fell 1 per cent from the previous three months.

With the global economy expected to grow by 3.2 per cent to 3.6 per cent in 2022, compared with 5.8 per cent last year, Sabic expects its earnings before interest, taxes, depreciation and amortisation (ebitda) to remain flat year over year, mainly due to the increase in sales volumes being offset by higher feedstock prices.

The company's ebitda increased 23 per cent a year in the first quarter to 12.8bn riyals.