Saudi Chemical Giant Sabic Posts Third Straight Quarterly Loss
Saudi Basic Industries Corp. reported a net loss of about 4.1 billion riyals ($1.1 billion), compared with a loss of 1.2 billion riyals in the prior period, according to a statement on Sunday. Analysts had been expecting a profit of 1.1 billion.
The company attributed losses to impairment charges related to asset closures at its Teesside facility in the United Kingdom and on its investment in Clariant. It also cited an increase in financing costs.
Market sentiment has remained uncertain, weighed down by ongoing global economic uncertainty and continued geopolitical tensions, Sabic said.
Sabic earlier this year announced a plan to restructure the company to cut costs, as softer demand has hit earnings and shrunk margins of major chemical companies around the world. Firms have been selling assets and shuttering projects in response to the challenges.
Dow Inc. reported its first quarterly loss in five years last month and said it would close three plants in Europe. LyondellBasell missed on second-quarter earnings and delayed construction on a project in Texas, while saying it remains 'cautiously optimistic' on developments to address execess capacity in Europe and revitalize the industry in Europe. Its shares fell 8% on Friday after the results.
BASF SE is also selling a unit to focus on its core business while Shell Plc said recently that its chemicals business has been suffering for a while.
Analysts expect Sabic to face ongoing margin pressure and weak pricing due to persistent oversupply in key petrochemical products, though its diversified portfolio and fixed-feedstock cost structure are seen as supporting margins. Sabic is considering a public listing of its industrial gases unit as part of a broader operational review.
The chemical giant's shares have declined about 20% this year. The broader Saudi index has dropped by about half of that amount over the same time period.
Saudi Aramco, the world's biggest oil exporter, owns a majority of Sabic and is due to report earnings on Aug. 5.
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