Saudi Basic Industries Corp (SABIC), one of the world’s largest chemicals company, said its second quarter profit plunged by 38 per cent due to a decline in global petrochemical prices and a slowdown in global demand.
The company reported a second quarter revenue of SAR 35.87 billion (US$ 9.57), down 17 per cent compared to the same period last year. Net income during the quarter was SAR 2.12 billion.
SABIC, which earlier this year agreed with Saudi Aramco to sell a 70 per cent of its stake for $69.1 billion, said margins were a key culprit in lower profit.
“The slowdown in global GDP growth coincides with a decline in petrochemical prices due to a significant increase in new supply capacity resulting in lower product prices and margins in key product lines,” said Yousef Al-Benyan, SABIC vice chairman and chief executive officer.
“Though lower petrochemical prices have negatively impacted SABIC’s second quarter results, our operational performance remains robust. SABIC remains optimistic on industry fundamentals over the long term and we continue to invest for growth.”
Al-Benyan said the company recently received all the regulatory approvals to increase stake in Ar-Razi, the world’s largest methanol complex, to 75 per cent and renewed partnerships with Japan Saudi Arabia Methanol Company (JSMC) for a further 20 years. SABIC also obtained all approvals to establish a petrochemical joint venture project with Exxon Mobil in the U.S. Gulf Coast.
In the reporting period, SABIC also signed a Memorandum of Understanding (MoU) to scope a new solar PV-based power plant in Yanbu Industrial city that could have a potential capacity between 200 to 400 Mega Watt (peak). This project would be the Kingdom's first large scale renewable energy project built for and by the private sector.
The initiative aligns with SABIC’s wider sustainability efforts and in June the company launched its Sustainability Roadmap which is allied to the United Nations Sustainable Development Goals (SDGs). This plan outlines SABIC’s targets relating to resource efficiency, climate change, the circular economy, food security, sustainable infrastructure, and preservation of the environment.