Saudi Basic Industries Corp (SABIC) reported a 10 percent drop in quarterly profits on Tuesday, missing forecasts, as the world's biggest petrochemical firm by market value felt the impact of lower prices globally.
SABIC made a net profit of SR5.24bn ($1.40bn) for the three months to end December, compared with SR5.81bn in the same period a year earlier.
Analysts surveyed by Reuters expected the firm to post, on average, a net profit of SR7.1bn for the second quarter.
The bellwether Middle East conglomerate, which supplies chemicals, industrial polymers, fertilisers and metals globally, had posted record profits in the second and third quarters last year.
"The economic situation in Q4 impacted but we started to see an improvement in prices and we hope it improves further," chief executive Mohamed al Mady told reporters. "My prediction is that 2012 will be a mirror image of 2011 and that 2013 will be even better."
Mady said fourth quarter sales rose to SR47bn, from SR40.8bn in the prior-year quarter. On the year, SABIC had sales of SR190bn, up from SR151bn in 2010.
Over the past year, several SABIC subsidiaries have brought on stream new production lines, increasing the company's sales volumes at a time of high chemical prices.
Strong oil prices last year also enhanced the comparative advantage enjoyed by Saudi chemical producers, which typically use gas feedstock, over their global rivals which buy naphtha at prices linked to crude.
However, the sector's dependence on highly cyclical machinery makers, carmakers and builders makes SABIC, which is 70 percent state owned, particularly vulnerable to an economic downturn.
In November SABIC said it was setting up a venture capital arm, based in the Netherlands, to expand beyond petrochemicals into innovative technology companies.
SABIC shares closed 2.1 percent lower on the Saudi Arabian bourse ahead of the results.For all the latest industry 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.