MEED 100 largest listed companies: Petrochemicals

24 March 2015

The slump in oil prices makes itself felt as petrochemicals firms see values fall in the MEED 100

A total of nine petrochemicals companies feature in the MEED 100: six from Saudi Arabia, two from Iran and one from Qatar.

With the exception of Saudi Basic Industries Corporation (Sabic) at the top of the list and Mesaieed Petrochemical Holding Company, which is a new entrant to the table, all lost ground in 2015, compared with last year. This trend reflects the difficult time the global petrochemicals industry is enduring in the wake of the slump in oil prices since mid-2014.

Sabic remains the Middle East and North Africa region’s largest listed company by a large margin. However, the firm’s market capitalisation is today $22.8bn lower than in March 2014.

Sabic’s net profit dropped by 7 per cent in 2014 to $6.2bn, but its fourth quarter performance was much worse, with year-on-year profit falling by more than 29 per cent to $1.2bn.  

Senior management has said the company could fare much worse in 2015. Petrochemicals prices have eroded considerably since the start of the year.

Another factor that could stall the company’s growth is the decision by Sabic’s long-serving CEO Mohamed al-Mady to leave the firm and assume a role in the kingdom’s Defence Ministry.

This could result in slower decision-making, coupled with a reluctance to take any risks during such a volatile period. Despite these challenges, Sabic is worth over $32bn more than the number two company in the MEED 100, Qatar National Bank (QNB).

Mesaieed Petrochemical Holding Company debuted in the MEED 100 in 34th position, following the $880m flotation of a 25 per cent shareholding on the Qatar Stock Exchange in early 2014. The holding firm owns large interests in Qatar Chemical Company (Q-Chem), Qatar Chemical Company II (Q-Chem II) and Qatar Vinyl company, and has a market capitalisation of $9.1bn. It is the first of several new Qatari hydrocarbons firms expected to enter the Top 100 over the next few years. State energy major Qatar Petroleum says it plans to list another four in the next decade worth as much as QR50bn ($13.7bn). It was Qatar’s largest initial public offering since Vodafone Qatar raised $1bn in 2009, and the first in three years.

With so much uncertainty in the global petrochemicals market, there is a good chance at least two of the nine companies may not feature in the 2016 MEED 100 table. Iran’s Tamin Petroleum & Petrochemical Investment Company and Saudi Arabia’s National Petrochemical Company fell to 90th and 95th places respectively, and another bad year could see them drop out altogether.

With expectations that oil prices will not soon recover to above $65 a barrel, it will be a challenging year for global chemicals firms.

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