News Column

Sabic Q2 income rises 7pc; earnings hit $1.72bn

August 1, 2014

SAUDI BASIC INDUSTRIES CORPORATION (Sabic), one of the world's largest petrochemicals groups and the Gulf's largest listed company, reported a seven per cent increase in second-quarter net income.It earned SR6.46 billion ($1.72 billion) in the quarter, compared to SR6.04 billion in the year-earlier period, Sabic said in a bourse statement.

Sabic, which is 70 per cent state-owned, attributed the rise in profits to higher production and sales volumes as well as higher product prices. However, this was partly offset by a dip in sales volumes and an increase in feedstock costs for some products, the company said in a bourse filing.

The company's results are closely tied to global economic growth because its products - plastics, fertilisers and metals - are used extensively in construction, agriculture, industry and the manufacture of consumer goods.

There had been some concern in the stock market about Sabic's earnings after two of its subsidiaries, Yanbu National Petrochemical Company (Yanpet) and Saudi Arabian Fertilizer Company (Safco), missed analysts' second-quarter earnings forecasts last month.

Sabic's first-quarter earnings dipped 1.8 per cent year-on-year, as chief executive Mohamed al Mady complained that a lack of ample natural gas supplies within Saudi Arabia had emerged as a key constraint on growth there. Natural gas is used as a feedstock for petrochemical production.

Last year, Al Mady said Sabic planned to build a shale gas cracker in the United States, but he added that any investment would not be heavy in the initial stages and the company had no urgent funding needs.

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Source: Gulf, The (Bahrain)

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