Saudi Basic Industries Corp (SABIC), the world's biggest petrochemicals group by market value, posted second-quarter profit below analysts' forecasts, with sales hit by weak demand in China and Europe.
SABIC, which is 70 percent state-owned, reported net income of SR6.04bn ($1.61bn) for the three months to June 30, up 12 percent on the SR5.3bn in the same period last year.
The average forecast in a Reuters poll of ten analysts was for second-quarter earnings of SR6.4bn.
Concerns over slowing global economic growth has weighed on SABIC's financial performance in recent quarters amid slowing demand for its main products, including petrochemicals, metals and fertilisers. SABIC's products are used extensively in construction, car manufacturing and consumer goods.
SABIC attributed the increase in net income to a fall in costs and financial charges, offsetting lower selling prices for some of its products, according to a statement on the Saudi bourse.
Second-quarter sales stood at SR45bn ($12bn), down 3.2 percent on the same period last year, SABIC Chief Executive Mohamed al-Mady told reporters in Riyadh, citing slow demand from China and Europe.
"Europe is the hardest hit among all regions," Al-Mady said. In April SABIC said it planned to cut to 1,050 jobs in Europe and close some operations there because lower consumer spending had hit demand.
Al-Mady said the company is looking to expand its presence in chemicals and polymers in the United States, without giving specific details on the investment outlay it is planning.
SABIC shares have risen 4.7 percent this year, underperforming Saudi Arabia's benchmark index, which has gained 12.3 percent in the same period, Reuters data shows. The stock was trading down 1.3 percent at 1000 GMT.
The company had repaid SR25bn of debt in the past year and has outstanding debt of SR81bn, chief financial officer Mutlaq al-Morished said.For all the latest banking and finance 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.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.