SABIC second-quarter profit hit by higher selling costs, lower sales

DUBAI: Saudi Basic Industries Corporation (SABIC) on Sunday reported a 25 percent decline in second-quarter net profit on Sunday, amid higher selling costs and lower sales.
The world’s fourth-biggest petrochemicals company made a net profit of 3.71 billion riyals in the three months to June 30, down from a revised 4.96 billion riyals in the year-earlier period, the company said in a bourse statement.
SABIC said prior period figures have been restated. The company, like most Saudi publicly listed firms adopted IFRS accounting standards in January this year.
SABIC, which aims to be third-biggest petrochemicals producer globally, attributed the profit fall to higher cost of sales and lower sales quantities.
The company’s results are closely tied to oil prices and global economic growth because its products — plastics, fertilizers and metals — are used extensively in construction, agriculture, industry and the manufacturing of consumer goods.
SABIC had expected this year to be positive in terms of economic growth in key markets.
SABIC chief executive Yousef Al-Benyan said in May that the firm was evaluating acquisition opportunities in the range of $3 billion to $6 billion in petrochemicals, speciality chemicals and fertilizers and aims to do the first such deal in the fourth quarter of this year.
SABIC’s expansion is driven by the need to be closer to key markets and feedstock. Constraints in new gas supplies in Saudi Arabia is forcing petrochemical producers to look abroad for expansion.
The company is making progress toward major investment in the US with an affiliate of US Exxon Mobil, and its first project with oil giant Saudi Aramco for the development of oil-to-chemicals project in Saudi Arabia, which analysts see as a breakthrough in the industry.