Tasnee sees increase in product prices in Q2, says CEO

National Industrialization Co. (Tasnee) has witnessed a slight increase in product prices in Q2 2019, its CEO Mutlaq Al-Morished said during the earnings conference call.

“Prices had steeply declined at the end of 2018 and in Q1 2019,” Al-Morished said.

“In terms of petrochemicals, Tasnee is equally positioned compared to peer companies, but it invests in other industrial projects as well,” he added.

Al-Morished stated that global investors and producers have several concerns regarding the market conditions and the US-China trade war, in addition to the new capacity additions on the shale gas projects in US.

“Petrochemical producers may make higher profit, generate lower earnings or even incur losses,” he noted.

The GCC petrochemical producers will unlikely access the South Korean market due to higher transport costs and the African countries cannot buy economically-feasible amounts, Al-Morished explained, adding that the budding petrochemicals markets are China, Asia, North Africa and Europe.

Meanwhile Fawaz Al-Fawaz, Executive Vice President-Finance, stated that Tasnee reported positive and higher-than-expected results in Q2 2019, driven by the company’s cost-efficiency strategy and the Tronox - Cristal acquisition.

“The petrochemicals industry is facing several challenges including lower prices and the abundant supply,” Al-Fawaz said, looking forward for improved conditions over the coming period.

The Q2 2019 net profit after zakat and tax decreased 25 percent YoY to SAR 296.7 million. When compared to the previous quarter, net profit surged 86 percent driven by the transaction closure between Cristal and Tronox, as well as a decrease in financials costs.