Sabic Q1 net profit plunges 10pc
Jeddah, April 20, 2013
Saudi Basic Industries Corporation (Sabic), the world's biggest petrochemicals group, posted a 10 per cent year-on-year fall in its first-quarter net profit on Saturday, in line with analysts' forecasts.
Sabic said in a statement that its net income for the three months to March 31 was SR6.56 billion ($1.75 billion) compared to SR7.27 billion in the same period last year. It cited lower production and sales volumes due to planned maintenance at the facilities of some affiliates.
However, Sabic also said first-quarter profit had risen from SR5.83 billion in the fourth quarter of 2012. It cited higher sales prices of some products, which it did not name.
Eleven analysts surveyed by Reuters had forecast Sabic would earn, on average, SR6.59 billion in the first quarter.
The performance of Sabic is closely tied to the world economy because its products are used extensively in construction, car manufacturing and other major consumer goods.
In his comments, Sabic chief executive Mohamed al-Mady said the company was reviewing its global growth outlook, especially in light of the weak economic situation in Europe.
He was speaking at a news conference after Sabic said it planned to cut 1,050 jobs in Europe and close some operations there because lower consumer spending had hit demand.
"Sabic does not do this because it wants to lay off people or shut down any plants. It does this because the situation demands it," Mady remarked.
However, he described Europe as a "special case" and said the continent would remain a very important market for the company, even in bad times.
Mady said he could not predict global petrochemical prices for this year but thought 2013 would be similar to 2012, with improvement in prices occurring after 2013.
Sabic said its European operations faced increased competition from the US, where development of shale gas has cut natural gas prices, and Asia, where production and consumption have been rising.
The company's statement on Saturday, however, did not cite Europe as a factor in the drop of first-quarter profit.
Sabic affiliates in Saudi Arabia reported mixed earnings last week. Saudi Arabian Fertilizers Company (Safco) posted an 18 per cent jump in first-quarter net profit to SR932 million, but missed analysts' forecasts.
Yanbu National Petrochemical Company (Yansab), a large olefins producer, said its net profit fell 7.4 per cent. Saudi Kayan, where full-scale production is expected to start this year, said its net loss for the quarter more than doubled to SR155 million.-Reuters