MOSCOW (MRC) -- Sipchem, one of the largest companies in the petrochemical sector in Saudi Arabia, posted a quarterly net profit in Q3, the first in the last four quarters, aided by improvement in product prices and a recovery in demand post easing lockdowns, said Chemweek.
However, Q3 earnings missed analyst’s forecast and market expectations despite a strong beat in the topline, according to Al Rajhi Capital Research.
While details are not fully known, it is suspected that this could have been because of marketing revenues and mostly similar extent of costs as gross profit came broadly in line with estimates.
Methanol prices are up on a sustainable recovery trend, up by ~11% q-o-q in Q3, on the back of tight supply due to unexpected production outages in Southeast Asia and the Middle East along with an improvement in demand, mainly from the MTO (made to order) and pharmaceutical sectors).
Methanol prices continue to maintain its upward trend in Q4 so far, rising ~14% q-o-q, indicating an improving the Methanol market fundamentals. However, the stock price has already gained ~30% since March, and consensus estimates do not factor material improvement in earnings.
While the company’s announcement of a share repurchase programme may have improved sentiments, it may lead to no dividends for 2020.
As MRC informed earlier, Sadara Chemical Company (Sadara) and Sahara International Petrochemical Company (Sipchem) have partnered to supply high-quality ethanol which is required for the manufacturing of hand sanitisers. The ethanol has been provided to local manufacturers free of charge to enable them to produce much-needed hand sanitisers, which in turn were donated to the Ministry of Health for distribution to the healthcare industry throughout the Kingdom of Saudi Arabia to combat the spread of the Covid-19 pandemic.
We remind that Russia's output of chemical products rose in September 2020 by 6.7% year on year. At the same time, production of basic chemicals increased by 6.1% year on year in the first nine months of 2020, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-September output. Last month's production of primary polymers decreased to 852,000 tonnes from 888,000 tonnes in August due to shutdowns in Tomsk, Ufa and Kazan. Overall output of polymers in primary form totalled 7,480,000 tonnes over the stated period, up by 16.4% year on year.
Established in 1999, Saudi International Petrochemical Company (Sipchem) manufactures and markets methanol, butanediol, tetrahydrofuran, acetic acid, acetic anhydride, vinyl acetate monomer. Besides, it has launched several down-stream projects to manufacture ethylene vinyl acetate, low density polyethylene, ethyl acetate, butyl acetate, cross linkable polyethylene, and semi conductive compound that are scheduled to start in 2013.
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