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Saudi's SABIC upbeat despite Q2 profit worries - Daily News Egypt

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Saudi’s SABIC upbeat despite Q2 profit worries

RIYADH: Saudi chemicals company SABIC said excess stocks should be less of a problem and prices were stabilizing in the second half as its shares fell on quarterly results that showed weak prices hurting profits. At news conference on Monday after Sunday’s results undershot analysts’ forecasts, Saudi Basic Industries Corp also said it had no …


RIYADH: Saudi chemicals company SABIC said excess stocks should be less of a problem and prices were stabilizing in the second half as its shares fell on quarterly results that showed weak prices hurting profits.

At news conference on Monday after Sunday’s results undershot analysts’ forecasts, Saudi Basic Industries Corp also said it had no plans for a bond issue in the medium term.

The firm delayed a planned dollar bond in May and instead raised 8.25 billion riyals ($2.2 billion) through two loans last month from state-run National Commercial Bank and Alinma Bank, in which the finance ministry’s Public Investment Fund (PIF) is the largest shareholder.

PIF holds a 70 percent stake in SABIC.

Shares in the world’s biggest chemicals group by market value were down 1.4 percent at 86.50 riyals at 1000 GMT on Monday, trading for the first time since the results were released.

"A recovery in Asian demand had supported petrochemical producers’ margins, but inventories are now well stocked and with global sentiment weakening and product prices expected to fall, demand should also drop," said a petrochemicals analyst who asked not to be identified.

However, SABIC Chief Financial Officer Mutlaq Al-Morished told reporters that inventory levels in the second half should pose less of a problem in the second half.

"The level of inventories increased because of new capacities that have been introduced during the second quarter, including our own through Yansab, Sharq and Tianjin complex in China. This is not likely to happen again in the second half.

"What matters the most for us is that SABIC has been able to sell every ton it produces," he added.

Prices "appear" stabilized

Morished also said prices seemed to be stabilizing.

"As of May, we started to see a decline in prices but the start of our new capacities from Yansab, Sharq and Tianjin complex in China compensated this drop through a rise in production volumes.

Prices for the moment appear to have stabilized," Morished said.

Tianjin is SABIC’s joint-venture with Sinopec.

In Sunday’s results, SABIC said net profit rose 177 percent from a year ago to 5.02 billion riyals ($1.34 billion) as new output came on stream.

But it missed analysts’ forecasts of 5.62 billion riyals and undershot first quarter earnings of 5.43 billion as selling prices ate into margins.

Morished said second-quarter sales rose 6 percent in terms of volume compared to the previous quarter but he declined to give a sales value figure.

 

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https://dailyfeed.dailynewsegypt.com/2010/07/19/saudis-sabic-upbeat-despite-q2-profit-worries/
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