Higher prices, reduced costs boosted SABIC’s Q3, says CEO

Saudi Basic Industries Corp (SABIC) reported a strong net profit for Q3 2017, backed by improved prices, lower operational costs, higher production levels, and enhanced manufacturing reliability, Yousef Al-Benyan, SABIC Vice Chairman and chief executive told Argaam on Monday.

Output rose by 9 percent on a quarterly basis and by 6 percent compared to Q3 2016, while operational costs were slashed by 8 percent, or up to SAR 700 million year-on-year in the first nine months of this year.

“The impact of these cost reductions were clearly reflected in the Q3 financial results. We are leveraging the outcome of our transformation program to further enhance the company’s strong position,” he said, adding that these strong results came despite the challenging conditions in the global market.

SABIC’s Q3 net profit grew by 10.7 percent YoY to SAR 5.8 billion, backed by a rise in average selling prices and sales volumes.

Net profit growth was helped by improved product prices, as oil prices rose by an average of $4 to $53 per barrel, which reflected positively on the petrochemical industry as a whole.

Al-Benyan earlier said that SABIC’s 2025 strategy eyes expansions in China and the United States, along with boosting its presence in the promising markets of Vietnam, Indonesia, Japan, and Africa.

He also expects the US market to recover in Q4 quarter, compared to third quarter when Hurricane Harvey affected business.

Commenting on the company’s Tianjin polycarbonate complex, Al-Benyan said the facility will produce polycarbonate, of which SABIC is the world’s largest manufacturer.

The project will enhance the company’s competitive position, help it maintain production of such materials to tap high-demand markets until 2025, as over 65 percent of the world’s demand will come from China.

“We’ll also get strategic and commercial benefits from the oil-to-chemicals complex, which will support the Kingdom’s development plans. We hope to sign an initial agreement with Saudi Aramco by the end of this year,” Al-Benyan added.

Meanwhile, the chief executive ruled out bond or sukuk sales in the near term, affirming that SABIC has a strong financial position.

He also added that SABIC can adapt to changes in the tax systems across the markets where it operates.