Energy

Sabic announces SAR1bn profit in dramatic turnaround

November 4, 2024, 5:25 PM

Employees at Sabic's Jubail manufacturing site; increased prices for products helped raise profits

Reversal of Q3 2023 loss
Revenues up 3% y-o-y
Shares close to five-year low

Saudi Arabian petrochemical giant Sabic (Saudi Basic Industries Corp) has announced profit in Q3 2024 of SAR1 billion ($266.2 million) in a marked turnaround from the same period last year.

In 2023, the company reported a Q3 loss of SAR2.88 billion.

Revenues in Q3 2024 were up 3 percent year on year, and the company said higher average selling prices and lower losses on non-continuing operations are responsible for the turnaround.

Net profit in Q3 was down from Q2’s SAR2.18 billion. Total net profit for the first nine months of the year reached SAR3.43 billion, against a net loss of SAR1.04 billion for the same period in 2023.

Abdulrahman Al-Fageeh, Sabic’s CEO, said: “The increase in the third quarter’s profits compared to the same quarter last year is attributable to higher average selling prices of some key products, and a decrease in total losses on non-continuing operations. Despite current market challenges, we maintained a stable EBITDA margin.”

People, Person, Crowd Abdulrahman Al-Fageeh, centre, said there was a decrease in total losses — Abdulrahman Al-Fageeh, centre, said there was a decrease in total losses

While the company generated a profit in Q3, the figure of SAR1 billion was below the forecasts of some analysts.

Shares in Sabic are down 13.3 percent in the year to date, and are currently trading at SAR72.6, close to a five-year low. Aramco holds 70 percent of Sabic shares, while the remaining 30 percent are publicly traded on Tadawul.

Sabic is one of the largest petrochemical companies in the world and is Saudi Arabia’s third-largest listed company. In 2023, the company made its first annual net loss since 1990, as a result of a supply-demand imbalance that sent margins to two-decade lows.

In Sabic’s earnings press release, CEO Al-Fageeh also stressed that the company’s growth projects are under way as planned, including the $6.4 billion Fujian Petrochemical Complex and the methyl tert-butyl ether plant in Petrokemya, as well as the capacity increase at SK Nexlene, a plant in Ulsan, Korea.

The company, and the China-reliant global petrochemical industry more generally, has been struggling with tepid global growth and oversupply in the market over the past few years. Plants globally have been operating at historic lows — on average at 80 percent capacity, below the high 80s or low 90s required for healthy operations and margins.