MOSCOW (MRC) -- Saudi Basic Industries Corp (SABIC), one of the world’s largest petrochemicals groups, reported declining profits for a fifth straight quarter, although cost cutting helped its earnings beat analyst estimates, said Reuters.
Saudi Arabia’s petrochemical companies benefit from subsidised gas feedstock prices, giving them an advantage over rival manufacturers from non-oil producing countries.
Petrochemical prices are closely linked to those of oil so the slump in crude prices has reduced Saudi producers’ margins.
SABIC’s third-quarter profit fell 9.4 percent to 5.6 billion riyals (USD1.5 billion), although six analysts polled by Reuters had on average forecast the firm’s profit would be 4.7 billion riyals.
SABIC, 70 percent state-owned, cut costs by an average of 22 percent in the first nine months of 2015 through improved efficiency, acting chief executive Yousef Abdullah al-Benyan told a news conference in Riyadh.
This helped mitigate the impact of a 22 percent fall in third-quarter sales to 37.3 billion riyals from 48.7 billion riyals a year earlier, Benyan said.
The company’s products -- plastics, fertilisers and metals -- are used in construction, agriculture, industry and the manufacturing of consumer goods, so its performance is tied to world economic growth.
SABIC is considering petrochemical joint ventures in China and the United States and could make announcements to that effect in the first quarter of 2016, Benyan said in a separate interview with Reuters.
Broadly, SABIC will focus on its core products, such as chemicals and polymers, Benyan said.
As MRC informed earlier, this month, SABIC revealed it would reorganise its Innovative Plastics unit.
SABIC is a diversified manufacturing company, active in chemicals and intermediates, industrial polymers, fertilizers and metals. It is the largest public company in Saudi Arabia. It is the largest company in the Middle East.
SABIC is currently the second largest global ethylene glycol producer and is expected to become number one after the introduction of these new projects. SABIC is the third largest polyethylene manufacturer, the fourth largest polyolefins manufacturer and the fourth largest polypropylene manufacturer. It is also the world's largest producer of mono-ethylene glycol, MTBE, granular urea, polyphenylene and polyether.
MRC