Petrochemical giant Saudi Basic Industries Corp cites higher production, sales volumes for rise in profit
Saudi Basic Industries Corp (SABIC), one of the world's largest petrochemicals groups and the Gulf's largest listed company, reported a 7 percent increase in second-quarter net income on Sunday, matching analysts' forecasts.
It earned SR6.46 billion ($1.72 billion) in the quarter, compared to SR6.04 billion in the year-earlier period, SABIC said in a bourse statement.
This was in line with the average forecast of analysts polled by Reuters, who had predicted a quarterly profit of SR6.42 billion.
SABIC, which is 70 percent state-owned, attributed the rise in profits to higher production and sales volumes as well as higher prices for products. However, this was partly offset by a dip in sales volumes and an increase in feedstock costs for some products, the company said in a bourse filing.
The company's results are closely tied to global economic growth because its products - plastics, fertilisers and metals - are used extensively in construction, agriculture, industry and the manufacturing of consumer goods.
There had been some concern in the stock market about SABIC's earnings after two of its subsidiaries, Yanbu National Petrochemical Co and Saudi Arabian Fertilizer Co , missed analysts' second-quarter earnings forecasts earlier this month.
SABIC's first-quarter earnings dipped 1.8 percent year-on-year, as chief executive Mohamed al-Mady complained that a lack of ample natural gas supplies within Saudi Arabia had emerged as a key constraint on growth there. Natural gas is used as a feedstock for petrochemical production.
Last year, Mady said SABIC planned to build a shale gas cracker in the United States, but he added that any investment would not be heavy in the initial stages and the company had no urgent funding needs. "Most of the shale investment will come in 2017."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.