SABIC’s Q3 2022 profit margins hit by global challenges, higher demand ‘main driver’: Al-Fageeh

Abdulrahman Al-Fageeh, Acting CEO of SABIC

Saudi Basic Industries Corp.’s (SABIC) profit margins were pressured in the third quarter of 2022 by inflation, tightened monetary policy, higher interest rates and energy prices in Europe, as well as China’s zero-COVID policy, which were all factors beyond the company’s control, Acting CEO Abdulrahman Al-Fageeh said.

The company braced for facing these challenges through three modifications that included changes to globalization and trade flows, tighter policies and sustainability-based governance regulations, and technological development that empowers digitalization, he added during an investor call to discuss the third quarter results.

These major trends forced the company to change the way it used energy, including oil, gas, electricity and renewables, and consider its supply chain as a means to improve value.

SABIC aims to lead the global petrochemical sector and play a significant role in Vision 2030. It also seeks to grow its portfolio, while continuing its position as a local and regional player.

The giant petrochemical producer has a strong balance sheet, financial results and credit ratings, the top executive said, adding that the company's returns that are generated from operations in more than 100 countries reflect its robust chains of supply, business model and cooperation with clients.  

Al-Fageeh expects demand to grow significantly over the next decade, indicating that strong demand will be the main driver of the company, based on its competitiveness in terms of feedstock prices and innovation capabilities, as well as tapping growth incentives such as “Shareek” program and the Kingdom's strategy for converting oil to petrochemicals. 

Sustainability will remain the main driver for the company to develop its products, solutions and innovations, as well as manufacturing technologies and business environment. SABIC also targets a smooth transition towards net-zero carbon. In addition, the firm has a project and budget that will enable it to achieve its goals in this regard over the next 10 years and reach net-zero carbon by 2050.  

SABIC reported a net profit after Zakat and tax of SAR 16.24 billion for the first nine months of 2022, a drop of 10% from SAR 18.10 billion in the year-ago period. The third-quarter net profit after Zakat and tax tumbled 67% to SAR 1.84 billion from SAR 5.6 billion in Q3 2021, according to data available with Argaam.