Sabic Q3 net profit plunges 23pc
Riyadh, October 17, 2012
Saudi Basic Industries Corp (Sabic), the world's biggest petrochemicals group by market value, posted a 23 per cent slump in third-quarter net profit on Wednesday, citing lower product pricing for the decline.
The chemicals, metals and fertilisers conglomerate earned net income of SR6.3 billion ($1.68 billion) in the three months ended September 30, compared with a record profit of SR8.2 billion a year ago, it said in a bourse statement.
Despite the decline, the performance beat analysts' forecasts. Nine analysts polled by Reuters had forecast on average that Saudi Arabia's largest listed company would earn SR6.01 billion in the quarter.
Several Sabic units had already reported their quarterly results, with Saudi Arabian Fertiliser Company (Safco) saying its net profit dipped 5.1 per cent, and Yanbu National Petrochemical Company (Yansab) reporting a halving of income.
Commenting on the results, Mohamed Al-Mady, Sabic vice chairman and CEO, said the company continues to be stable due to its sound financial position over a sustained period of time.
“We are continuing to augment our operational performance at our plants, and we have adopted different strategies to introduce cost-effective measures in our manufacturing processes. Moreover, our diversified product portfolio helps in creating new opportunities for us in global markets,” he remarked.
Al-Mady pointed out that the decrease in profits was mainly due to a drop in the prices. "Despite an increase in overall production and sales during the last nine months, profits have fallen as against the previous year, again due to a drop in prices," he stated.
The Sabic chief said despite the global economic downturn, the company was able to bost its performance and operational capacities.
"This has resulted in mitigating the adverse effects of economic fluctuations, which have had a negative impact on the overall performance of the petrochemicals sector, he added.
In 2011, Sabic enjoyed a bumper year of record profits and growth as new production lines started up and world chemical prices were buoyed by demand in Asia.
But as weak global economic conditions this year weighed on demand, product prices fell. Sabic also had temporary operational shutdowns at some plants.
The petrochemical giant is particularly vulnerable to world economic conditions because its products are used in so many industries globally, including construction and car manufacturing.
Analysts have said the outlook for next quarter is little better, but that the company should benefit in 2013 from the addition of significant new revenue from its Saudi Kayan unit, which will start full operations.-Reuters and TradeArabia News Service
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