Saudi Basic Industries Corporation (SABIC), the world's biggest petrochemicals group by market value, said on Wednesday its second-quarter net income reached SR5.30bn ($1.41bn), down 35 percent on the same period last year.
It was also a decrease of 27 percent on the SR7.27bn earned in the previous quarter, it said in a statement published by the Saudi Press Agency.
SABIC's shares climbed 0.6 percent to 86.75 riyals on Wednesday, taking their gains to 1.8 percent since July 15's 16-month low.
Net income for the six months ended June 30 was SR12.57bn compared to SR15.79bn for the same period in 2011, a decrease of 20 percent, the statement added.
The decrease was mainly attributable to lower product pricing and higher raw materials costs for certain products, despite higher production and sales volumes.
The decrease in net income quarter on quarter was driven by lower product pricing as well as lower production and sales volumes due to plant maintenance activities, SABIC said.
The second-quarter results were also affected by the continuous slowdown in global economic growth, especially in Europe, China and North America, which negatively impacted the prices of petrochemical products.
"As a result of the global economic slowdown customers seek to reduce the size of their inventory of petrochemical products in anticipation of the decline of prices for these products worldwide," the statement said.
"In the third quarter, we may see the return of these customers to increase the volume of their inventories. In addition, some high-cost producers will decrease their production levels, which helps to return back the balance in the market," SABIC added.
"Under these variables, we will be focusing on the reliability of operations to improve the operating costs and to introduce new products with higher returns from our innovation centers around the world. We expect a positive impact on the future results," SABIC said.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.
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