SABIC’s Q2 profit falls by 25%
31 Jul 2017 - 0:15
Riyadh: Saudi Basic Industries Corp (SABIC) missed estimates with a 25 percent fall in second-quarter net profit on Sunday as the world’s fourth-largest petrochemicals maker reported higher selling costs and lower sales.
Net profit fell to SR3.71 bn ($989.3m) in the three months to June 30 from a revised SR4.96bn a year earlier, the company said in a bourse statement.
That fell well short of the SR4.6bn expected by analysts. SABIC shares fell 1.2 percent in opening trade on the kingdom’s stock exchange.
Chief Executive Yousef al-Benyan (pictured) said profit fall stemmed from weaker performance at its Hadeed iron and steel unit.
“The impact of our Q2 comes from Hadeed, related to inventory and slow sales,” Benyan told a news conference in Riyadh.
The drop in demand for steel was seasonal, driven by the Muslim holidays of Ramadan and Eid, he said, adding the company would try to reduce expenses and increase production.
“Hopefully in the third and fourth quarters the demand will pick up, because normally these (expenses and production) are impacted by these important occasions in the second quarter,” Benyan said.
SABIC, which aims to be the world’s third-biggest petrochemicals producer, said prior period figures had been restated. Like most Saudi publicly listed firms, SABIC adopted IFRS accounting standards in January.
Its plastics, fertilisers and metals are used in construction, agriculture and manufacturing.
SABIC had expected this year to be positive in terms of economic growth in key markets. The firm’s earnings shot up 80 percent in the first quarter buoyed by higher prices.
Benyan told Reuters in May the firm was evaluating acquisition opportunities in the range of $3bn to $6bn in petrochemicals.