Sabic, the Middle East's biggest petrochemicals company, posted an 81 per cent increase in second-quarter net income, beating analysts' estimates, as sales volumes rose and average selling prices of its products climbed.
Net income for the three months ending June 30 reached 6.7 billion Saudi riyals (Dh6.56bn), Sabic said on Sunday in a filing to the Saudi stock exchange, where its shares are traded.
Sales jumped 26 per cent year-on-year to 43.3bn riyals and rose 3 per cent quarter-on-quarter, while costs fell, the company said.
The earnings came in above the second-quarter net profit estimate of 5.76bn riyals by Bahrain's Sico, 5.92bn riyals by EFG Hermes and 5.84bn riyals by NCB Capital.
"The increase in net income is attributable to higher average selling prices and increase in sales volumes," the company said. "During this period Sabic implemented strategic restructuring initiative with an impact on total cost amounted to 1.1bn riyals."
Public companies covered by Egyptian investment bank EFG Hermes in Saudi Arabia, the world’s biggest oil exporter and the region’s largest economy, are expected to post an aggregate 20.3 per cent year-on-year growth in second-quarter income, it said in a report released earlier. The kingdom’s industrial sector including the petchems sector is expected to lead the rise as the Saudi economy recovers on the back of a rise in oil price.
Sabic, in particular, is being watched closely after the world's biggest oil producing company, Saudi Aramco, earlier this month said it is in talks with the petchems company's majority shareholder, the Public Investment Fund to acquire a stake in it.
The discussions are preliminary and there is no certainty that any such transaction will take place, Aramco said in a statement at the time. Aramco has “no plans to acquire any publicly held shares of Sabic”, which is 70 per cent owned by PIF, Saudi Arabia’s sovereign wealth fund.
Aramco and Sabic signed an agreement in November to build a $20bn oil-to-chemicals facility on the Red Sea Coast of Saudi Arabia – the world’s largest facility of its kind. In April, the partners said they had awarded US engineering firm KBR a project management contract to develop the scheme.
Separately, Saudi Arabia's National Petrochemical Company, a petchems sector investment firm, said its second-quarter net income jumped 118 per cent as selling prices climbed and sales volumes improved.
Net income for the period rose to 288 million riyals, up from 132m riyals in the year-earlier period, the company said in a filing to Tadawul. Quarterly sales rose 27.6 per cent to 2.23bn riyals.
The increase in second quarter net profit came as the average prices of products at the Saudi Polymers Company increased and sales volumes rose from levels that were affected by an earlier unplanned shutdown in the facilities, the company said.
Financing cost and selling and marketing expenses, however rose, while other income during the period fell, it said.
Established in 2008, the company owns 65 per cent stake in Saudi Polymer Company, a 20bn riyal petrochemical facility in the kingdom's Jubail industrial city, according to its website.