Saudi's SAFCO posts 7.8% drop in Q2 net profit

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Saudi Arabian Fertilizer Co (SAFCO) posted a fifth-straight decline in quarterly earnings on Sunday, missing analyst estimates with a 7.8 percent fall in second-quarter net profit after higher sales failed to make up for lower prices.

The company, a unit of Saudi Basic Industries Corp (SABIC), one of the world's biggest petrochemical companies, said it made SR639 million ($170.4 million) in the second quarter, compared to SR693 million in the same period a year ago.

A group of nine analysts polled by Reuters had forecast on average that SAFCO would make SR689.2 million in the quarter.

Like other leading fertiliser producers, SAFCO has been hit by falling prices of urea as China has ramped up output of the nitrogen-rich compound. Average urea prices slumped by $311 a ton in the second quarter, down 15 percent year on year.

Other petrochemical players in Saudi Arabia have also struggled to achieve earnings growth. Yanbu National Petrochemical (Yansab) missed analysts' estimates on Sunday with a 8.6 percent drop in second-quarter net profit - the company's third successive quarterly decline.

The performance of SAFCO and Yansab are eagerly watched for a steer on results from SABIC, the biggest shareholder in both companies. SABIC reports its earnings this month.

However, Saudi International Petrochemical Co (Sipchem) beat analysts' forecasts with a 41 percent jump in second-quarter profit on Sunday, aided by higher profit margins and sales.


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