Saudi Basic Industries’ second-quarter profit plunged to the lowest level since 2009 as demand for chemicals and plastics declined.
Net income dropped to 2.12 billion riyals ($565 million) from 6.7 billion riyals a year ago, the biggest petrochemicals maker in the Middle East said in a statement. The average estimate of five analysts was for a profit of 3.37 billion riyals.
A downturn in the global economy, including the car industry, has dented demand for plastics and chemicals, leading to a spate of profit warnings at companies such as BASF.
“Though lower petrochemical prices have negatively affected Sabic’ second-quarter results, our operational performance remains robust," Chief Executive Officer Yousef Abdullah Al Benyan said. "Sabic remains optimistic on industry fundamentals over the long term and we continue to invest for growth."
"The new capacities in key products lines that pressured Sabic’s product prices and margins in the first half of 2019 are expected to continue to impact the company’s earnings in the second half of 2019," the company said. Sabic said there is no change to its previous outlook.
The petrochemicals maker said last week it suspended talks with Clariant on their high-performance plastics venture a day after the Swiss company’s CEO Ernesto Occhiello unexpectedly quit. Sabic cited "current unfavorable market conditions" for halting talks and said it’s looking forward to continuing the discussions once conditions improve.
Saudi Aramco, the world’s biggest oil producer, is in the process of buying a majority stake in Sabic from the kingdom’s sovereign wealth fund for $69.1 billion. The Middle East’s biggest-ever deal had been first mooted last year after the initial public offering of Aramco was postponed.For all the latest energy and oil news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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