Saudi Basic Industries Corporation, the biggest petrochemicals producer in the Middle East, reported a year-on year and quarter-on-quarter rise in net income as average sale prices and volumes of goods sold improved in the first quarter.
The company reported a net profit of 5.51 billion Saudi riyals (Dh5.39bn) for the three months ending March 31, up 5.4 per cent from 5.23bn riyals for the same period in 2017, Sabic said on Sunday in a statement to Saudi Stock Exchange Tadawul, where its shares are traded. Net income was 49 per cent higher than 3.7bn riyals reported at the end of the fourth quarter of last year, it said.
Profit for the latest quarter came slightly under the 5.55bn riyals mean estimate of analysts polled by Bloomberg whose estimates ranged between 5.10bn to 5.88bn riyals.
“The increase in net income is attributable to higher average selling prices and sold quantities despite the strategic restructuring initiative implemented by Sabic in the first quarter 2018 that aims to increase productivity ... in addition to lowering the cost structure,” the company said in the bourse filing.
The impact on total cost as a result of the restructuring initiative amounted to 1.1bn riyals, the company said.
Sabic’s sales for the period however were in line with analysts' estimates. Total sales at the end of the first quarter climbed to 41.86bn riyals, a 15 per cent year-on-year and 4 per cent quarter-on-quarter rise. Three analysts' estimates for the quarterly sales ranged between 38.50bn riyals to 43.77bn riyals.
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The company, which is 70 per cent owned by the Saudi government, is among the biggest listed firms in the broader Middle East. It produces plastics, fertilisers and metals that are used extensively in construction, agriculture, industry and manufacturing of consumer goods. Sabic has struggled to maintain profitability in the wake of the three-year oil price slump. The company reported a 19 per cent slide in its fourth-quarter 2017 net income, which it attributed to reduced output and fewer products sold during the period.
Sabic has restructured its business in recent years and is looking to develop its speciality chemicals business to diversify revenue streams. Along with Saudi Aramco, the world’s biggest oil exporter, Sabic is a key component of Saudi Arabia’s economic diversification drive as the kingdom seeks greater downstream integration and builds major refining and petchems facilities to cut its dependence on the sale of crude for revenues.
In November, both companies signed an agreement to build one of the world’s largest oil-to-chemicals facilities on the country’s western Red Sea Coast. The partners last week awarded the US engineering firm KBR a project management contract to develop the $20bn scheme.
