Petro Rabigh revenue seen to increase after projects integration: FALCOM

Rabigh Refining and Petrochemical Co.’s (Petro Rabigh) revenue growth is expected to continue on higher production capacity of Ethylene and Propylene following the integration of Rabigh Phase I and Phase II projects in the Petro Rabigh Industrial Complex, FALCOM Financial Services said in a report.

“However, profitability may be impacted due to the company’s high level of debt and shrinking refining margins,” the research firm said.

Petro Rabigh revenue increased by 19.8 percent year-on-year (YoY) to SAR 41 billion in 2018 mainly due to higher petrochemical prices and volumes.

Meanwhile, gross profit fell 14.1 percent YoY to SAR 2.3 billion on lower refining margins. Gross margins fell to 5.6percent in 2018 from 7.9 percent a year earlier.

Selling and marketing expenses grew manifold to SAR 439 million for the year, while general and administrative expenses declined 2.2 percent YoY to SAR 948 million.

Operating income (excluding other income) plunged 43.9 percent YoY to SAR 927 million.

During Q4 2018, the company swung to operating losses of SAR 91 million compared to an operating profit of SAR 623 million a year earlier.

Net profit fell 53 percent YoY to SAR 669 million for the year on lower operating income.

FALCOM maintained a “Neutral” rating on the stock, but revised the target price to SAR 19 per share.