Sabic Profit Misses Estimates as Product Prices Decline

(Bloomberg) -- Saudi Basic Industries Corp. reported full-year and fourth-quarter profit that missed analysts estimates as the average selling price for products from the Middle East’s biggest petrochemicals maker dropped.

Full-year profit rose 17 percent to 21.54 billion riyals ($5.7 billion), compared with the mean estimate of 23.67 billion riyals. Fourth-quarter profit declined 12 percent to 3.24 billion riyals compared with an estimate of 5.29 billion riyals.

Sabic, as the company is known, and Switzerland’s Clariant AG are discussing how to combine their specialty chemicals businesses, Yousef Abdullah Al Benyan, the Saudi company’s chief executive officer, told reporters in Riyadh.

Key Numbers

• FY sales 169.09 billion riyals, estimate 169.68 billion (range 167.41 billion to 172.38 billion) (data compiled by Bloomberg)
• 4Q sales 40.13 billion riyals, estimate 40.41 billion (range 38.8 billion to 42.4 billion) (data compiled by Bloomberg)
• Cites increase in selling, general and administrative expenses, and decrease in share of results from associates and joint ventures.
  • Implemented strategic restructuring initiative with an impact of 1.1 billion riyals.

In Depth

• Sabic seeks expansion opportunities in the U.S., China and Africa, Al Benyan said in Riyadh.
• Demand for petrochemicals is expected to be healthy in 2019, and prices will stabilize this year, he said.
• The company is still to decide whether to increase its 26 percent stake in Clariant
• State-owned Saudi Aramco is in talks to buy shares in Sabic from the country’s sovereign wealth fund as the world’s biggest crude oil exporter expands ahead of a planned initial public offering. Aramco has no plans to acquire any publicly held shares in Sabic.
• Sabic and Aramco in November selected Yanbu, on the kingdom’s west coast, as the site to set up an integrated industrial complex to convert crude oil to chemicals.
• The complex is expected to process 400,000 barrels per day of crude oil, which will produce about 9 million tons of chemicals and base oils annually
• Expected to create an estimated 30,000 direct and indirect jobs
• Sabic is rated A1 at Moody’s; A- at S&P; A+ at Fitch. All have stable outlooks.
  • Click here for credit rating profile: SABIC AB Equity CRPR

Dig Deeper

• For financial statement, click here.

Shares

• Shares were 0.7 percent higher at 121.2 riyals at 11:05 a.m. local time, after declining to as low as 117.8 riyals after the earnings announcement.
• Stock has gained 4.3 percent this year.
• The analyst consensus one-year price target for the company is 127.52 riyals, for a potential return of 5.9 percent. Analysts left the target little changed in the past three months.

Read More

Aramco Considers Selling $10 Billion Bond to Acquire Sabic Stake
Aramco, Sabic Choose Yanbu as Site for Crude to Chemicals Plant

To contact the reporters on this story: Shaji Mathew in Dubai at shajimathew@bloomberg.net;Vivian Nereim in Riyadh at vnereim@bloomberg.net;Anthony DiPaola in Dubai at adipaola@bloomberg.net

To contact the editors responsible for this story: Shaji Mathew at shajimathew@bloomberg.net, Bruce Stanley, Rachel Graham

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