Advanced forecasts better H2 financials on stable product prices, says Chairman

Advanced Petrochemical Co. is expected to report better financial figures in H2 2019, backed by stable product prices and a decline in feedstock prices, CNBC Arabia has reported, citing Chairman, Khalifa Al-Melhem.

Al-Melhem attributed Q2 profit decline to lower sales, hit by an $81 drop in product prices.

"The decline in feedstock prices did not offset lower product prices," Al-Melhem added.

Also, Advanced's Q2 higher expenses were attributed to incurring one-off costs related to the plants' shutdown to improve operating efficiency, in addition to the company's social activities, he noted.

Advanced's Q2 net profit retreated by 24 percent year-on-year (YoY) to SAR 192 million, Argaam reported.

The latest trade war weighed on the global demand especially in China and East Asia, sending prices down. However, the trade war truce announced between the US and China in G20 meetings will likely help boost demand for petrochemicals, Al-Melhem stated.

The propane as well as the propylene plants represent a "qualitative transition" for the company and will likely boost its investments by one and half times, Al-Melhem noted, adding that 50 percent of the project will be financed from the Saudi Fund for Development, 25 percent from commercial banks and the remaining percentage from own resources.

Last month, the Ministry of Energy, Industry and Mineral Resources approved Advanced Global Investment Company’s allocation of required feedstock for two new plants in Jubail Industrial City, with a production capacity of 750,000 per annum each and a total investment cost of SAR 6.75 billion.