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Sabic reports loss of $747m as product prices tumble

Sabic said better conditions in its agriculture and automotive businesses are supporting its margins Reuters/Faisal Al Nasser
Sabic remains steadfast in pursuing future growth despite short-term market challenges, said CEO Abdulrahman Al-Fageeh

Petrochemicals major Saudi Basic Industries Corporation (Sabic) reported a net loss of SAR2.8 billion ($747 million) in 2023, as average product sales fell by a fifth.

The losses were also driven by the discontinuation of operations at Hadeed, its steel manufacturing subsidiary, which resulted in a loss of around SAR4 billion.

In September 2023, Sabic agreed to sell 100 percent of its steel unit to the state-owned Public Investment Fund for SAR12.5 billion.

The Saudi Aramco subsidiary reported a profit of SAR16.5 billion in 2022, the company said in a statement published on the Saudi bourse.

“The announced divestment of Hadeed is proceeding as planned and this optimisation of internal resources will enhance our core focus on petrochemicals,” CEO Abdulrahman Al-Fageeh said.

“Additionally, we are pursuing a number of initiatives to address the competitiveness of our European assets, ultimately striving for a maintainable and modernised footprint in the region,” he added.

Revenue for the full year reached SAR141.5 billion, down 23 percent year on year.

The cost of sales fell by 16 annually by controlling fixed manufacturing costs and implementing optimisation initiatives despite macroeconomic and industry-specific challenges.

Free cash flow stood at around SAR14 billion, including the effect of a SAR6 billion reduction in working capital. 

“Sabic remains steadfast in pursuing future growth despite short-term market challenges. The positive final investment decision on Fujian offers a clear signal of our commitment to developing a robust position in key geographies such as China,” Al-Fageeh said.

The company maintains a robust financial position and is committed to continuing shareholder cash distributions despite difficult market conditions, he added.

Sabic will deploy between $4 and $5 billion in capex this year to achieve carbon neutrality targets and transform the business to maximise returns.

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