MOSCOW (MRC) -- Saudi Basic Industries Corp (SABIC), one of the world's largest petrochemicals groups, reported a 23.2 percent drop in second-quarter net profit on Wednesday, extending a earnings slump as lower sales prices continued to weigh, said Reuters.
SABIC made a net profit of 4.74 billion riyals (USD1.26 billion) in the three months to June 30, down from 6.17 billion riyals in the year-earlier period, the company said in a bourse statement.
The result was ahead though of the 3.92 billion riyal average estimate of five analysts polled by Reuters.
SABIC, which is 70 percent state-owned, attributed the profit fall to lower average sales prices, in addition to an impairment on the assets of Ibn Rushd, an affiliate of SABIC.
Lower oil prices have adversely affected SABIC's earnings, with the company's profits falling in the seven preceding quarters, Reuters data shows.
The company's results are closely tied to oil prices and global economic growth because its products -- plastics, fertilisers and metals -- are used extensively in construction, agriculture, industry and the manufacturing of consumer goods.
Saudi's petrochemical companies, which for years benefited from subsidised gas feedstock prices versus competitors from non-energy producing countries, are also having to adjust to government energy and gas feedstock reforms which will raise their costs.
From the first quarter of 2016, SABIC's total annual costs before minority interests will rise by around 5 percent.
As MRC wrote before, SABIC and an affiliate of Exxon Mobil Corporation are considering the potential development of a jointly owned petrochemical complex on the U.S. Gulf Coast. If developed, the project would be located in Texas or Louisiana near natural gas feedstock and include a world-scale steam cracker and derivative units. Before making final investment decisions, the companies will conduct necessary studies and work with state and local officials to help identify a potential site with adequate infrastructure access.
Saudi Basic Industries Corporation (Sabic) ranks among the world top petrochemical companies. The company is among the worlds market leaders in the production of polyethylene, polypropylene and other advanced thermoplastics, glycols, methanol and fertilizers.
MRC