The world’s biggest chemicals maker said profit margins would remain tight after its earnings slumped due to the global economic downturn and weakening demand for plastics and building materials.
(Bloomberg) —
The world’s biggest chemicals maker said profit margins would remain tight after its earnings slumped due to the global economic downturn and weakening demand for plastics and building materials.
Saudi Basic Industries Corp. said net income dropped to 290 million riyals ($78 million) in the fourth quarter, down 94% year-on-year and the worst result since the height of the coronavirus pandemic in mid-2020.
The Saudi Arabian company’s results were similar to those of rivals such as BASF SE, which last week said it would cut 2,600 jobs, and Dow Inc. The firms have been hit by lower sales for key products like naphtha as central banks raise interest rates. Their margins were also squeezed when Russia’s invasion of Ukraine a year ago triggered a surge in prices for natural gas, a crucial feedstock.
“Margins will continue being under pressure in the first half of 2023,” Sabic said.
Sabic, based in Riyadh and majority owned by state oil company Saudi Aramco, said average sale prices dropped 9% from the previous quarter.
Its full-year net profit was $4.4 billion, down 28% from 2021. The company announced a $3.4 billion annual dividend, up 6.25%.
Sabic has a market valuation of $73 billion, more than that of any other listed chemicals firm. Its shares have climbed 2.8% in 2023 to 91.90 riyals, though they’re still down from around 135 riyals since April last year.
It said it will continue with its “relentless growth amibitions” both in the kingdom and abroad. Last year, it signed a deal with Aramco and China’s Sinopec to build an oil-to-petrochemicals plant in western Saudi Arabia. It’s also looking at projects in Poland and elsewhere in eastern Europe.
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