Sabic, the region's largest petrochemicals company, swung to a 4.86 billion Saudi riyals ($1.29bn) net profit in the first quarter, from a net loss of 1.05bn riyals during the same period last year, due to higher prices for its products.
Sabic, which is majority owned by Saudi Aramco, said revenue increased 24 per cent to 37.53bn riyals in the first three months of the year, according to the company's regulatory filing with the Tadawul stock exchange on Thursday.
“Sabic's financial performance has seen a positive start to 2021. The first quarter saw rising oil prices and a tight supply and demand balance, further impacted by heavy turnarounds and storm Uri in the US," said Yousef Abdullah Al Benyan, vice chairman and chief executive at Sabic.
Growing demand for petrochemical products amid continued recovery in the global economy "resulted in higher prices and margins for most of our products”, he added.
Sabic’s products gained from a nearly 39 per cent quarterly rise in oil prices in the first quarter of 2021.
Japanese and European naphtha prices rose by more than 37 per cent in the first quarter.
Prices for other products such as Japanese propane and butane also increased by more than 20 per cent in the first quarter, compared with the previous three months.
A rise in feedstock prices increased the cost of sales by 7 per cent to 26.36bn riyals in the first quarter of 2021.
The company's earnings before interest, taxes, depreciation, and amortisation surged 139 per cent year-on-year to 10.39bn riyals.
Sabic expects robust margins to continue into the second quarter of the year, on the back of "healthy oil prices and relatively tight supply and demand balances" for its primary products.
Separately, Saudi Aramco and Sabic said they would transfer the marketing and sales responsibility for a number of the oil company's petrochemicals and polymers products to Sabic.
The companies will also designate the Aramco Trading Company to off-take and resell Sabic's products.
The changes will be implemented in a phased manner this year and subject to consents obtained from both parties.
“The transfers reflect our shared commitment to capitalise on the complementary nature of Aramco and Sabic's respective product portfolios as we strive to create added value for our customers and shareholders," said Ibrahim Al Buainain, Aramco Trading Company's president and chief executive.