SABIC's Q1 2019 net profit offset by product mix: CEO
Saudi Basic Industries Corp.'s (SABIC) product mix has mitigated the direct impact of lower prices on its Q1 2019 financial results, chief executive officer Yousef Al Benyan told Argaam on Sunday.
The prices of basic petrochemical products – such as methanol, glycol ethylene, and polycarbonate – were adversely impacted in the period between 2018 and Q1 2019.
The 5 percent rise in the company's profit on a quarterly basis was driven by reliability programs, cost cuts and higher sales, SABIC earlier said in a statement.
“SABIC is continuing to focus on internal issues to alleviate external impacts,” Al Benyan said, expecting to see better performance until the end of this year.
"SABIC's presence in Europe is important to enhance its competitive position. It produces more than 150 innovative petrochemical products with most applications coming from its European operations," he added.
The Europe Repositioning Program, which aims to improve SABIC's position in those markets, will last three years.
Commenting on the planned merger between Saudi Petrochemical Company (SADAF) and Arabian Petrochemical Company (Petrokemya), he said the merger, upon completion, will cut costs for one year.
“The consolidation mainly aims to increase benefit from feedstock and convert basic petrochemicals into high profit products,” Al Benyan said.
Meanwhile, the transformation program of Saudi Iron and Steel Co. (Hadeed) is expected to be finalized in Q3 2019.
“The plan seeks to enhance competitiveness and reliability in the industry, reduce costs and meet the local market demand,” he noted.
"Contrary to other global products in SABIC, steel is exported to regional markets. Prices of steel products have marginally increased amid improved performance in the housing and contracting sectors. We expect better results in the segment this year," Al Benyan said.
SABIC is also proceeding with acquiring a 25 percent stake in Saudi Methanol Company (Ar-Razi) as part of partnership with Japan Saudi Arabia Methanol Company Inc.
“The latest updates about the planned acquisition will be disclosed soon,” he concluded.
SABIC's Q1 2019 net profit after zakat and tax dropped 38.1 percent year-on-year to SAR 3.41 billion.