Saudi International Petrochemical Co.’s (Sipchem) will be the first to seek mergers once regulatory policies in the kingdom are improved, chief executive Ahmad Al-Ohali told CNBC Arabia on Thursday.
Commenting on fiscal year 2016, the CEO said total leverage stood at SAR 7 billion, of which affiliated companies’ debt accounted for SAR 3 billion. He added that financing charges reached nearly SAR 70 billion.
Sipchem’s Q4 net profit doubled from the same quarter a year earlier to SAR 52.3 million, while FY16 profit plunged 76 percent year-on-year on lower selling prices and higher feedstock and energy costs.
Al-Ohali said the company posted strong Q4 net profit as selling prices of some products— mainly methanol and ethylene-vinyl acetate— increased.
However, the company’s earnings and profit margins were hurt by a 5 percent to 22 percent decline in product selling prices when compared to 2015.
The petrochemical producer managed to cut direct costs by over SAR 100 million, as part of its drive to enhance operating and plant performance, Al-Ohali added.
The Saudi market regulator is reportedly planning to revisit the regulatory framework for mergers, as they have become essential for petrochemical producers amid today’s volatile market conditions.
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