Saudi Basic Industries Corporation (Sabic)has reported a year-on-year decrease in profits of 37 per cent to SR 1,879 million ($501 million) in the first nine months of 2001, with rising sales revenues offset by higher feedstock prices. Total turnover was SR 23,000 million ($6,133 million) in the first nine months of the year, representing a 21 per cent increase on the same period of last year. The results show a slump in the third quarter, as the company's half-year results were only 27 per cent lower than in 2000 (MEED 3:8:01).
Alongside the higher cost of feedstock, Sabic is also repaying loans made by the Saudi General Investment Fund. Production increased by 27 per cent to 26.3 million tonnes in the first nine months of 2001, reflecting the achievement of an annualised production rate of 35.1 million tonnes a year (t/y). The company is now undertaking an expansion programme with a target of increasing capacity to 48 million t/y by 2010.
The falling profits are indicative of global conditions in the petrochemicals industry, which is in a cyclical trough. The industry is expected to start turning around within the next two years, before reaching a peak in 2004-05. The peak had been expected earlier, but forecasts have been adjusted to take account of the global economic slowdown.