Sabic Sees Profit Hit by Costs

Saudi Basic Industries Corp., the world’s largest chemical maker by market value, posted a 33% jump in quarterly profit but expects rising feedstock prices to pressure earnings over the rest of the year.
The Riyadh-based company, known as Sabic, made net income of 6.47 billion riyals ($1.73 billion). The figure was above analysts’ average estimate of just over 5 billion riyals.
The company, controlled by oil giant Saudi Aramco, said in a statement that pre-tax earnings would “remain flat” this year, with rising sales being offset by higher costs for inputs.
First quarter results were “driven by continued healthy demand for our products, higher oil prices and our diverse global portfolio,” Chief Executive Officer Yousef Al-Benyan said. However, chemicals demand in the second half “will be pressured by a global economic slowdown, inflation and also the rise in interest rates,” he told reporters.
Sabic stock trimmed gains as the company warned about the outlook for chemicals demand. The shares rose to a high of 125.4 riyals before falling back to 122.4 riyals at 11.19 a.m. in Riyadh. The stock has risen 6.72% this year, below the 16% gain for the Saudi index, giving the company a market capitalization of $99 billion.
Demand for products from plastics to paint has soared in the past year with economies recovering from the coronavirus pandemic. Yet a global supply-chain squeeze has pushed up costs for chemical producers, lowering their margins.
Sabic’s competitors such as BASF SE and Dow Inc. have raised their prices recently amid constraints in procuring raw materials.
The Saudi chemicals maker has no plans to exit its stake in Clariant AG, Al-Benyan said. Sabic holds a 32% stake in the Swiss company, which it sees as having a “major role” in helping it buidling its own specialty chemicals business, he said. The commitment to the Swiss firm follows Clariant saying last month that Chief Financial Officer Stephan Lynen will step down after concluding a preliminary investigation of its accounting that will cause the company to restate 2020 results.
What do you think? We’d love to hear from you, join the conversation on the
Rigzone Energy Network.
The Rigzone Energy Network is a new social experience created for you and all energy professionals to Speak Up about our industry, share knowledge, connect with peers and industry insiders and engage in a professional community that will empower your career in energy.
- Baker Hughes Moving Closer To Fulfilling Net-Zero Target
- Prelude LNG Shipments Disrupted Until Mid-July Over Pay Spat
- Libya Halts Oil Exports from Key Port
- New UK Oil Tax Raises Risk of Energy Shortages
- USA Condemns Mortar Attacks on IKR Oil Infrastructure
- First-Ever 8th Gen Drilling Juggernaut Delivered To Transocean
- Top Headlines: USA Navy and Iran Corps Clash in Strait of Hormuz and More
- USA Energy Sec Leads Meeting with 7 Major Oil Companies
- Oil and Gas Lease Sales in Wyoming, Colorado, New Mexico Pushed Back
- G7 Weighs Russia Oil Price Cap
- Germany Fears Russia Could Permanently Close Main Gas Pipeline
- New Mexico Oil Refinery Cost Doubles
- $150 Oil Could Still Happen. Here's How.
- Russian Oil Isn't Dead Yet
- Sonatrach Makes Massive Gas Find In Sahara Desert
- Oil Prices Buck Recession Trend
- USA Navy and Iran Corps Clash in Strait of Hormuz
- Oil Industry Responds to Biden Letter
- Rapidly Decaying Supertanker Could Explode at Any Time
- Top Headlines: USA Navy and Iran Corps Clash in Strait of Hormuz and More
- Oil Nosedives on Fed Inflation Actions
- Top Headlines: Oil Industry Responds to Biden Letter and More
- Too Early To Speculate on ExxonMobil Refinery Fire Cause
- Fitch Solutions Reveals Latest Oil Price Forecast
- ExxonMobil Made More Money Than God This Year
- Russian Oil Disappears as Tankers Go Dark