Elevated polymer prices trigger Sabic’s Apr-Jun’24 quarter margins, yielding record growth in profits

Riyadh-headquartered petrochemical manufacturer, Saudi Basic Industries Corporation (Sabic), posted a record 84.7 percent jump in its net profit for the April-June 2024 quarter due to a surge in sales volume and higher margins resulting from elevated polymer prices. Sabic, a subsidiary of Saudi Aramco, the second-largest public sector company in the Middle East and Saudi Arabia, is engaged in the manufacture of petrochemicals, chemicals, industrial polymers, fertilizers, and metals.

For the quarter ended June 2024, Sabic reported a net profit of Saudi Riyal (SR) 2.18 billion, compared to SR1.18 billion in the corresponding quarter of the previous year. The company reported a manifold increase when compared with its net profit of SR0.25 billion earned in the sequential previous quarter.

Operational profits of the company rose by a staggering 28 percent to SR2.1 billion in the April-June 2024 quarter versus SR1.64 billion registered in the comparable quarter of the previous year. According to the company statement, total sales of the company jumped by 4.8 percent to SR35.72 billion in the April-June 2024 quarter, as against SR34.1 billion reported in the same quarter last year.

A marginal contraction of just 3 percent was reported in the sales of the company for the January-June 2024 period to SR70.53 billion versus SR68.4 billion registered in the last year’s period under consideration. The decline in net sales reflected on the company’s operational profit which reported a fall of 2.6 percent to SR3.31 billion in the January-June 2024 compared to SR3.4 billion reported in the same period last year. Despite fall in sales and operational profits, a global leader in diversified players in chemicals and petrochemicals, among others, reported a 32.1 percent rise in its net profit for the January-June 2024 period.

Commenting on the financial performance, Abdulrahman Al-Fageeh, Chief Executive Officer and Executive Board Member of Sabic, stated, “The significant rise in profits is attributed to better product margins and increased sales volumes, along with effective management of supply chain challenges in the region. This reflects our resilience, innovation, and ability to adapt under the prevailing challenging circumstances and meet the demands of our customers worldwide.”

Significant milestones
Meanwhile, the company declared a cash dividend of SR5.1 billion for the first half of the year, underscoring its robust financial position and commitment to shareholder returns. Sabic also realized cumulative benefits of over SR7.5 billion (US$2 billion) from synergies with Saudi Aramco. Beyond financial performance, Sabic achieved significant milestones in environment, health, safety, and security (EHSS). The company achieved substantial improvement in EHSS performance during the second quarter, and committed to maintaining a world-class safety record. The company's safety performance improved significantly, with a SHER of 0.18 in the April-June quarter of 2024 compared to 0.47 in the same period last year, representing a 62 percent improvement.

Meanwhile, Sabic obtained all mandatory approvals from competent authorities in May 2024, fulfilling all requirements to complete the sale of its stake in the Saudi Iron and Steel Company (Hadeed) to the Public Investment Fund (PIF). This strategic divestment allows Sabic to focus on its main portfolio and contribute to Saudi Arabia's Vision 2030.

High polymer prices
Data compiled by Polymerupdate Research showed the prices of polypropylene Raffia CFR South East Asia stabilising between US$980 and US$1000 a tonne for almost entire April-June quarter compared to US$920-950 a tonne in the beginning of the previous quarter (January-March 2024). Similarly, prices of high-density polyethylene (HDPE) Raffia CFR South East Asia jumped higher to US$1040-1070 a tonne towards the end of June 2024 from an almost flat range of US$1000-1040 a tonne in the beginning of April 2024. Early January 2024, HDPE Raffia CFR South East Asia prices remained subdued at US$930-960 a tonne, the lowest in four years. Other polymers also moved up in similar fashion.

Al-Fageeh added, “We are committed to pursue business growth, provide our customers with innovative solutions and enhance research and development capabilities. We are truly honored by the trust of our customers, suppliers, and partners. Their continuous support and trust in us are the cornerstones of our success.”


DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com