Saudi's SABIC posts 10% fall in Q1 net profit

World's biggest petchems firm announces results after cutting more than 1,000 jobs in Europe

SABIC headquarters.

SABIC headquarters.

Saudi Basic Industries Corp (SABIC), the world's biggest petrochemicals group, posted a 10 percent year-on-year fall in its first-quarter net profit on Saturday, in line with analysts' forecasts.

SABIC said in a statement that its net income for the three months to March 31 was SR6.56bn ($1.75bn) compared to SR7.27bn in the same period last year. It cited lower production and sales volumes due to planned maintenance at the facilities of some affiliates.

However, SABIC also said first-quarter profit had risen from SR5.83bn in the fourth quarter of 2012. It cited higher sales prices of some products, which it did not name.

Eleven analysts surveyed by Reuters had forecast SABIC would earn, on average, SR6.59bn in the first quarter.

The performance of SABIC is closely tied to the world economy because its products are used extensively in construction, car manufacturing and other major consumer goods.

Last Thursday, the company said it planned to cut 1,050 jobs in Europe and close some operations there because lower consumer spending had hit demand.

It said its European operations faced increased competition from the United States, where development of shale gas has cut natural gas prices, and Asia, where production and consumption have been rising.

The company's statement on Saturday, however, did not cite Europe as a factor in the drop of first-quarter profit.

SABIC affiliates in Saudi Arabia reported mixed earnings last week. Saudi Arabian Fertilizers Co (SAFCO) posted an 18 percent jump in first-quarter net profit to SR932m, but missed analysts' forecasts.

Yanbu National Petrochemical Co (Yansab), a large olefins producer, said its net profit fell 7.4 percent. Saudi Kayan, where full-scale production is expected to start this year, said its net loss for the quarter more than doubled to SR155m.

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