Saudi Basic Industries Corporation (Sabic), the Middle East’s biggest petrochemicals producer, swung to a loss in the fourth quarter of 2019 on the back of a decline in revenue, lower selling price of its products and impairment charges it made on one of its affiliate businesses.
The company reported a net loss of 720 million riyals (Dh705m) for the three months to the end of December, compared to a profit of 3.22 billion riyals recorded in the fourth quarter of 2018, the company said in a statement to the Tadawul stock exchange, where its shares trade.
Sabic, 70 per cent owned by Saudi Aramco through a $69bn deal last year, is at the heart of Saudi Arabia’s economic diversification drive. The company, however, has struggled to maintain profitability in recent quarters amid a global economic slowdown that has impacted demand and petrochemical product prices.
This is the first quarterly loss for the petrochemicals giant in 10 years, driven by the provision it made for its petroleum products joint venture, Ibn Rushd. The Sabic affiliate firm produces aromatics and purified terephthalic acid among other things that are found in polyester and polyester staples making.
“The net loss in the fourth quarter of 2019 is mainly attributable to lower average selling prices in addition to the recording of 2.8bn riyals impairment provision in Ibn Rushd,” Sabic said on Wednesday.
Sabic, the largest non-oil industrial company in the kingdom, has four main business units focusing on petrochemicals, specialties, agri-nutrients and metals. It is optimising its portfolio and plans to expand into new markets to generate alternative income streams to offset weaker revenues.
The company last month said Saudi Arabian Fertiliser Company (Safco) has agreed to buy a unit of Sabic for 4.59bn riyals to boost growth and look for new opportunities. Safco will acquire 100 per cent of Sabic Agri Nutrients Investment Company by way of an increase in share capital and an issuance of new shares to Sabic, according to a statement at the time.
Sabic, in October last year, also signed a preliminary agreement with the state-controlled Russian Direct Investment Fund and Moscow-based ESN Group for a potential investment in a methanol plant in the Russian Far East.