Sixth straight quarter of declining profits sees SABIC make net profit of $821m in three months to Dec 31
Saudi Basic Industries Corp (SABIC), one of the world's largest petrochemicals groups, reported a 29.4 percent drop in fourth-quarter net profit on Sunday due to lower prices for its products, particularly in its metals division.
It was the sixth straight quarter of falling profits for the company, which has been hurt by the fall in oil prices since mid-2014.
SABIC made a net profit of 3.08 billion riyals ($821 million) in the three months to Dec. 31, down from 4.36 billion riyals in the year-earlier period, the company said in a bourse statement.
Analysts polled by Reuters had on average forecast SABIC would make a quarterly profit of 4.18 billion riyals.
Its metals business, Saudi Iron and Steel Co (Hadeed), made a net loss of 1.1 billion riyals compared with the same quarter of 2014, despite cost cuts.
Hadeed will cut costs until the end of 2016 because it does not expect global steel prices to recover for two to four years, a SABIC executive told Reuters in November.
Petrochemical product prices are closely linked to those of oil, while Saudi firms receive subsidized energy and feedstock.
That means high oil prices give them better margins and a competitive advantage over rival manufacturers from non-oil producing regions, although this benefit diminishes as crude prices decline. Oil prices are at around 12-year lows.
Three of SABIC's affiliates, including Saudi Arabia Fertilizers Co, reported profit falls on Thursday.
SABIC's fourth-quarter results were also dragged lower by a 375 million riyal impairment against equipment at its Ibn Rushd unit, the statement said.
Arabian Industrial Fibers Company is 45.19 percent owned by SABIC, with the state-owned Public Investment Fund and other regional investors owning the balance, according to SABIC's website.
SABIC disclosed its earnings after market hours. Its shares closed down 3 percent, outperforming the wider market which fell 5.4 percent after a slide in oil prices on Friday.