Saudi's SABIC sees Q2 net profit slump
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Saudi Basic Industries Corporation (SABIC), the world's biggest petrochemicals group by market value, said on Wednesday its second-quarter net income reached SR5.30bn ($1.41bn), down 35 percent on the same period last year.
It was also a decrease of 27 percent on the SR7.27bn earned in the previous quarter, it said in a statement published by the Saudi Press Agency.
SABIC's shares climbed 0.6 percent to 86.75 riyals on Wednesday, taking their gains to 1.8 percent since July 15's 16-month low.
The decrease in net income quarter on quarter was driven by lower product pricing as well as lower production and sales volumes due to plant maintenance activities, SABIC said.
The second-quarter results were also affected by the continuous slowdown in global economic growth, especially in Europe, China and North America, which negatively impacted the prices of petrochemical products.
"As a result of the global economic slowdown customers seek to reduce the size of their inventory of petrochemical products in anticipation of the decline of prices for these products worldwide," the statement said.
"In the third quarter, we may see the return of these customers to increase the volume of their inventories. In addition, some high-cost producers will decrease their production levels, which helps to return back the balance in the market," SABIC added.
"Under these variables, we will be focusing on the reliability of operations to improve the operating costs and to introduce new products with higher returns from our innovation centers around the world. We expect a positive impact on the future results," SABIC said.