SABIC quarterly profit slumps by 94% amid costs rise

Saudi Basic Industries Corp (SABIC), one of the biggest petrochemical companies in the world, said on Tuesday that its fourth quarter net profit has slumped by 94 percent, affected by oil prices and global economic growth.

The company announced a net income of 290 million Saudi Riyal ($77.28 million) in the final three months of 2022, down from SAR 4.97 billion the year before.

SABIC’s shares dropped 4 percent to SAR 88 in early trade in Riyadh right after the results were out, while its earnings affected with oil prices because the company’s products such as plastics, fertilisers, and metals, are used in various fields.

SABIC said that the prices of the company’s main petrochemicals segments, chemicals, performance polymers, and polyethylene were all low in the fourth quarter.

The company also added that margins are expected to face pressure throughout the first half of 2023, as a result of slow demand.

Abu Dhabi’s Borouge, the polyefins producer, announce $400 million cost saving this month to help control inflation and the supply chain disruptions, according to Reuters.

SABIC’s acting chief executive, Abdulrahman Al-Fageeh, said that the Chinese demand after the lifting of the pandemic restrictions could return in the second quarter or the second half of 2023.

However, Al-Fageeh also said that up until this point “we cannot see the higher demand which was expected to take place.”