Saudi Basic Industries Corp (SABIC) beat analysts' forecasts with a $1.45 billion net profit in the first quarter after improvements in both prices and demand.
The world's biggest petrochemical firm by market value beat four out of six forecasts and the average of $1.39 billion in a Reuters survey.
Profit also improved compared to the $1.22 billion SABIC made in the fourth quarter.
SABIC, whose earnings serve as a yardstick for those of other petrochemical majors such as Germany's BASF and Dow Chemical, had shocked markets with a loss of $259.7 million in the first quarter of 2009.
In a statement released after markets closed on Saturday, SABIC said: "The improvement in net profit ... stems from a rise in volumes (and) a noticeable improvement in prices of most petrochemicals and plastics."
Hesham Abu Jamea, head of asset management at Bakheet Investment Group, said: "SABIC's earnings show that it is performing well compared to the pace of the global economic recovery."
He added: "But the global crisis is not a thing of the past. Prices of SABIC products are still below their levels at the time whe the firm was making above $1.8 billion in quarterly net profit."
Shuaa Capital analyst Laurent Patrick Gally said the steel unit may have "spoiled" what could have been a "really nice quarter" but given a recent 32 percent average increase in steel prices it was unlikely it would harm second quarter results.
Operating profit stood at $2.58 billion for the quarter up from $101.3 million a year earlier. Earnings per share were $0.48 by end March up from a net loss per share of $0.08 a year ago.
The company reiterated that new capacity from its Yanbu National Petrochemical Co (Yansab) and Eastern Petrochemical Co (Sharq) affiliates coupled with a "gradual exit out of the global financial crisis" would help the firm's performance.
It did not set a timeframe.
Abu Jamea said: "The start of Yansab and Sharq should enable SABIC to make a a net profit in the second quarter higher than in first quarter. We expect it to be around $1.66 billion."
Last week, Yansab posted its first profit in two years as it started of commercial operations and as the prices of its products improved.
SABIC usually does better in terms of profitability than rivals because it purchases feedstock at lower prices.
Gally said: "Net net, at this stage, I don't expect the shares to move up or down materially tomorrow."
SABIC last traded flat at $27.5 on Saturday. (Reuters)For all the latest market 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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