“Saudi Sabic Petrochemical Company Sees 90% Drop in Profits Due to Global Demand Decline”

Saudi Basic Industries Corporation (SABIC), one of the world’s largest petrochemical companies, announced today, Thursday, that its net profit for the first quarter fell 90 percent, and said it expects margins to remain under pressure in the second quarter.

The company achieved a net income of 660 million riyals ($175.98 million) for the three months ending March 31, down from 6.47 billion riyals in the same quarter of the previous year.

Despite the decline, SABIC’s profits exceeded the average analysts’ expectations of achieving net income in the first quarter of 540 million riyals, according to Refinitiv data.

The CEO of the company, Abdul Rahman Al-Faqih, said in a statement: “We are closely monitoring the ongoing changes and the process of recovery of demand in the global market, and the new production capacities in the first quarter of 2023 constitute more pressure on global prices, in light of the limited decrease in variable costs.”

He added, “We continue to keep operating costs under control and maintain a strong balance sheet, and despite the uncertainty in the markets, our commitment to innovation and sustainability remains strong.”

The Shrek program, which was announced in 2021, aims to lead SABIC and oil giant Saudi Aramco, which owns 70 percent of SABIC, in investments worth $1.3 billion in the private sector until 2030, as part of broader plans to reduce dependence on oil.

The company said: “High inflation and interest rates continue to add to the uncertainty around global demand growth, and we expect product margins to remain under pressure in the second quarter of 2023.”

In March, SABIC announced the start of commercial operations at a polycarbonate plant in China, a joint venture with Sinopec, which will have an annual capacity of 260,000 tons.

Sources told Reuters on Tuesday that Aramco is listening to proposals from Sinopec and Total Energy to invest in developing the Jafurah field in Saudi Arabia.

The Chinese state-owned gas giant said in March it was exploring opportunities in Saudi Arabia, where it already owns a stake in a refinery.

(Reuters)