Saudi Ara­bian petro­chem­i­cals gi­ant SABIC sees Q1 net prof­its decline by 39%

The China Post - - WORLD BUSINESS -

Saudi petro­chem­i­cals gi­ant SABIC on Sun­day posted a 39 per­cent decline in net prof­its for the first quar­ter of 2015 com­pared with a year ago be­fore global oil prices plunged.

Saudi Ba­sic In­dus­tries Corp, the largest pub­licly traded firm in the Gulf, re­ported net profit of 3.93 bil­lion riyals ( NT$32.53 bil­lion; US$1.05 bil­lion) for the three months end­ing March 31.

That com­pared with a net profit of 6.44 bil­lion riyals in the same quar­ter a year ear­lier.

The drop in oil prices from above US$100 (NT$3,098) per bar­rel over the past year to around US$56 for U.S. bench­mark crude on Fri­day “has af­fected greatly the petro­chem­i­cal price,” SABIC’s act­ing vice-chair­man and CEO, Yousef alBenyan, told re­porters.

“The petro­chem­i­cal com­pa­nies will go through some pres­sure with re­gard to prof­itabil­ity. This is be­cause of the drop in oil prices,” he said.

“The petro­chem­i­cal in­dus­try

is mar­ried and linked to oil prices,” Benyan said.

In a state­ment, SABIC said that although costs had fallen, lower av­er­age sale prices were also down, with a re­sul­tant fall in net in­come.

Rev­enue dropped 28 per­cent in the first quar­ter com­pared with the same pe­riod a year ear­lier, from 49.22 bil­lion riyals to 35.51 bil­lion riyals be­cause of the “im­pact of de­clin­ing oil prices,” Benyan said.

He added that the in­dus­try was cycli­cal and the long-term out­look was good for the com­pany, which has a global pres­ence. “We are op­ti­mistic,” Benyan said. Crude prices have tum­bled on wor­ries over over­sup­ply and weak de­mand growth.

Saudi Ara­bia is the world’s big­gest oil ex­porter and SABIC is one of the world’s largest petro­chem­i­cal man­u­fac­tur­ers, pro­duc­ing chem­i­cals, fer­til­iz­ers, plas­tics and met­als.

The com­pany also op­er­ates wholly owned Saudi Iron and Steel which sells do­mes­ti­cally.

De­spite fall­ing oil rev­enues, the king­dom’s bud­get for 2015 pro- jected a slight in­crease in spend­ing, leav­ing it with an ex­pected deficit of US$39 bil­lion, its first since 2011.

But an anal­y­sis by Jadwa Re­search in early April said the ac­tual deficit will reach US$106 bil­lion.

That fore­cast did not take into ac­count the even­tual cost of an air war which a Saudi-led coali­tion launched on March 26 against rebels in Ye­men.

Saudi Ara­bia has as­signed 150,000 troops and 100 war­planes to the Ye­men op­er­a­tion, ac­cord­ing to a Saudi ad­viser.

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