Safco full-year profits fall 57 per cent

12 January 2010

Profits down due to low fertiliser prices and the closure of some plants for maintenance

Profits at Saudi Arabian Fertilizers Company (Safco) fell sharply in 2009, on the back of lower fertiliser prices in the second half of the year and the need to temporarily shut some plants to carry out maintenance work.

The company reported net profits of SR1.84bn ($490m) for the whole of 2009 in a filing to the Saudi Stock Exchange (Tadawul) on 11 January, down 57 per cent from the SR4.28bn it made in 2008.

Fourth quarter profits in 2009 were SR376m, down 30 per cent from the same period in 2008.

Analysts at Bahraini investment bank Sico attribute the fall in profits during the last three months of the year to lower production rates and a series of shutdowns at key fertiliser plants to carry out maintenance work. Safco had previously blamed lower profitability in the third quarter of the year on the relatively low prices it was getting for its output.

The company sells urea and ammonia. Urea prices averaged $276 a tonne between October and December 2009, down 6 per cent from the same period a year before, according to Sico. Ammonia prices were down 22 per cent from a year before, averaging a price of $285 a tonne for the quarter.

Sico expects the company to fare better in 2010 as demand and prices for fertilisers both increase. “We remain bullish on the 2010 nitrogen fertiliser outlook,” says Ankit Gupta, an analyst at Sico.

Gupta forecasts an average urea price of $305 a tonne and an average ammonia price of $290 a tonne for this year.

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