Sabic results hit by global downturn

15 February 2002

Net profits at Saudi Basic Industries Corporation (Sabic) slumped by 51 per cent to SR 1,782 million ($475 million) in 2001 due to a sharp drop in global petrochemical prices, the company announced on 13 February. The fall in profits came despite a 28 per cent surge in marketed product to 27.4 million tonnes, which pushed total sales up by 9 per cent to SR 28,900 million ($7,710 million). Total production jumped by 26 per cent to 35.4 million tonnes, following the completion of a raft of expansion projects launched by Sabic affiliates in the late 1990s.

Sabic blamed the performance on weak global demand particularly in the last quarter of 2001 following the 11 September attacks on New York and Washington. It said prices across many of its product lines, including polyethylene, styrene and ethylene dichloride, had reached all-time lows. It added that global prices for flat steel products had come under severe pressure, while at home, steel prices had been hit by dumping. It is also said that the results had been affected by Sabic affiliates having to pay back some SR 500 million ($133 million) to the Saudi Public Investment Fund.

Sabic vice-chairman and managing director Mohammad al-Mady predicted that prices would gradually improve during the second half of the year. Improvements in price indicators were already being seen, as was the return of price stability across some of its product lines, he said.

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