MOSCOW (MRC) -- Saudi Basic Industries Corp (SABIC), one of the world's largest petrochemicals groups, reported a 29.4% drop in fourth-quarter net profit on Sunday due to lower prices for its products, particularly in its metals division, said Reuters.
It was the sixth straight quarter of falling profits for the company, which has been hurt by the fall in oil prices since mid-2014. SABIC made a net profit of 3.08 billion riyals (USD821 million) in the three months to Dec. 31, down from 4.36 billion riyals in the year-earlier period, the company said in a bourse statement.
Analysts polled by Reuters had on average forecast SABIC would make a quarterly profit of 4.18 billion riyals. Its metals business, Saudi Iron and Steel Co (Hadeed), made a net loss of 1.1 billion riyals compared with the same quarter of 2014, despite cost cuts.
Hadeed will cut costs until the end of 2016 because it does not expect global steel prices to recover for two to four years, a SABIC executive told Reuters in November.
Petrochemical product prices are closely linked to those of oil, while Saudi firms receive subsidized energy and feedstock. That means high oil prices give them better margins and a competitive advantage over rival manufacturers from non-oil producing regions, although this benefit diminishes as crude prices decline. Oil prices are at around 12-year lows.
Three of SABIC's affiliates, including Saudi Arabia Fertilizers Co, reported profit falls on Thursday.
SABIC's fourth-quarter results were also dragged lower by a 375 million riyal impairment against equipment at its Ibn Rushd unit, the statement said.
Arabian Industrial Fibers Company is 45.19 percent owned by SABIC, with the state-owned Public Investment Fund and other regional investors owning the balance, according to SABIC's website.
As MRC informed earlier, SABIC is modifying its Wilton cracker in the UK to enable it to use ethane feedstock imported from the US. The company is aiming to complete the project by 2016.
Saudi Basic Industries Corporation (Sabic) ranks among the worldпїЅs top petrochemical companies. The company is among the worldпїЅs market leaders in the production of polyethylene, polypropylene and other advanced thermoplastics, glycols, methanol and fertilizers.
MRC