Sabic, the Middle East's largest petrochemicals company, reported a 40 million Saudi riyals ($10.7m) net profit for 2020, down 99.23 per cent from the previous year, due to lower average selling prices in most products in addition to impairment provisions in certain capital and financial assets.
While net profit for the year was markedly down in 2020 from the company's 5.2 billion riyals earnings in 2019, Sabic beat estimates from analysts polled by Bloomberg, who forecast a full-year loss of almost 300m riyals due to the impact of the coronavirus pandemic.
Net profit for the last quarter of the year largely cushioned the impact surging 104 per cent to reach 2.22bn riyals from the year-earlier period, the company said in a regulatory filing to the Tadawul exchange, where its shares trade.
"The fourth quarter benefited from sustained economic recovery, which translated into a healthier demand for our products," said Yousef Abdullah Al Benyan, vice chairman and chief executive of Sabic.
"Our global business model and the strength of our global supply chain continue to demonstrate their resilience and flexibility, positioning us well for long-term growth," he added.
Saudi Aramco, the world's largest oil-exporting company has a 70 per cent stake in Sabic, which it bought for $69.1bn in June.
The petchems company said in its latest results that $1.5bn to $1.8bn of "expected recurring annual value creation and synergy" with Saudi Aramco is expected by 2025.
About 80 per cent of this value will be generated from procurement, sales and marketing, supply chain and stream integration as well as feedstock optimisation and maintenance optimisation, Sabic said.
Longer-term, the company sees fresh opportunities to create value with Aramco through growth projects optimisation, joint venture management as well as through a one-service delivery model.
Sabic's full-year revenues fell 14 per cent to reach 116.96bn riyals. They climbed 12 per cent in the fourth quarter to 32.85bn riyals.
The company drew higher revenues from the rise in crude prices, which increased three per cent for Brent in the third quarter of 2020, compared with the previous quarter.
Prices for Japanese and European naphtha also increased in tandem by around two per cent in the last quarter of the year, compared with the third quarter.
Products such as Japanese propane and butane also surged 30 per cent in the final quarter compared with the three month-period ending September.
The cost of sales between October and December rose nine per cent to 24.73bn riyals compared with the third quarter, due to higher feedstock prices.
Sabic also gave an indication of its expectations for sales for 2021. The chemicals giant estimates sales to average two to five per cent higher than in 2020, supported by global recovery aided by the rollout of Covid-19 vaccines.
The company also sees profit before tax to be "moderately higher" than the previous year. Capital expenditure in 2021 is expected to be "similar" to the last fiscal year.
