SABIC H1 2025 results reflect one-off strains given restructuring, external provisions: Analysts

Saudi Basic Industries Corp. (SABIC) headquarters

Saudi Basic Industries Corp. (SABIC) reported a net loss of SAR 5.28 billion in H1 2025, compared to a SAR 2.43 billion profit a year earlier, hurt by recognizing SAR 3.78 billion in impairments and provisions tied to the closure of its Olefins 6 cracker in Teesside, UK.

The shutdown is part of SABIC’s portfolio optimization plan, aimed at improving operational efficiency and cost control amid ongoing challenges in the petrochemical sector.

In Q2 alone, SABIC posted a net loss of SAR 4.1 billion. Analysts told Argaam that the results were shaped by non-recurring, non-operational factors, particularly asset impairments and restructuring in Europe, while core performance remained resilient.

European Impairments Fueled Record Losses

Jassim AlJubran, Director, Head of Sell-Side Research at AlJazira Capital

Jassim AlJubran, Director - Head of Sell-Side Research at AlJazira Capital, said SABIC’s Q2 2025 losses stemmed mainly from SAR 3.78 billion in asset impairments at SABIC’s UK factory complex, amid continued pressure from high feedstock costs and negative margins in Europe.

He noted that contributions from affiliates and joint ventures (JVs) fell by SAR 838 million, mainly due to asset devaluations, including SABIC’s stake in Clariant which generated SAR 1.1 billion in restructuring charges in Q1 2025 and are expected to persist through Q3 of this year.

The Saudi-listed company’s gross profit margin dropped to 12.43% during the same period, marking the lowest level since 2020, indicating ongoing operational pressure. AlJubran warned that these one-off items make quarterly or annual comparisons less reliable.

Core Operations Steady Despite Market Pressures

Hussein Al-Attas, Financial advisor 

According to financial advisor Hussein Al-Attas, more than 90% of SABIC’s second-quarter losses were due to non-operational provisions linked to European asset impairments. He said these reflected a broader capital efficiency strategy and efforts to offload non-viable assets.

Despite headwinds, SABIC held revenues steady at SAR 35.7 billion, underscoring resilient sales. However, weak product prices and high feedstock costs continued to erode profitability.

Al-Attas partly attributed this downturn to the global petrochemicals cycle, pressured by slowing demand in China and Europe, market saturation, and growing competition among low-margin producers.

He praised SABIC’s decisive restructuring and asset optimization strategy, describing it as a positive move towards long-term sustainability.

A H2 2025 Rebound is Possible

AlJubran expects a gradual recovery in H2 2025 as one-off charges ease and restructuring wraps up by Q3 2025. A seasonal drop in feedstock costs may also support margin recovery.

He believes SABIC is well-positioned to benefit from a better operating landscape, supported by its solid balance sheet and strategic focus on cost control and efficiency.

Al-Attas shared a similar sentiment, noting SABIC is preparing for a potential upcycle in 2026, with potential improvements in demand and product margins in the cards.