Saudi Basic Industries Corp, one of the world's largest petrochemical groups, reported a 29.4% drop in fourth-quarter net profit on Sunday due to lower prices for its products, particularly in its metals division.
It was the sixth straight quarter of falling profits for the company, which has been hurt by the fall in oil prices since mid-2014, Reuters reported. SABIC made a net profit of 3.08 billion riyals ($821 million) in the three months to Dec. 31, down from 4.36 billion riyals in the year-earlier period, the company said in a bourse statement.
Analysts polled by Reuters had on average forecast SABIC would make a quarterly profit of 4.18 billion riyals.
Petrochemical product prices are closely linked to those of oil, while Saudi firms receive subsidized energy and feedstock.
That means high oil prices give them better margins and a competitive advantage over rival manufacturers from non-oil producing regions, although this benefit diminishes as crude prices decline. Oil prices are at 12-year lows.
Three of SABIC's affiliates, including Saudi Arabia Fertilizers Co, reported profit falls.
SABIC's fourth-quarter results were also dragged lower by a 375-million-riyal impairment against equipment at its Ibn Rushd unit, the statement said.
Arabian Industrial Fibers Company is 45.19% owned by SABIC, with the state-owned Public Investment Fund and other regional investors owning the balance, according to SABIC's website.
SABIC disclosed its earnings after market hours. Its shares closed down 3%, outperforming the wider market that fell 5.4% after a slide in oil prices on Friday.
The company's acting chief executive said on Monday SABIC can adapt to any new petrochemical supply entering the market from outside the kingdom, as Iran's release from sanctions promises increased global oil supply.
Yousef Abdullah Al Benyan added that he was not sure about the state of Iran's petrochemical industry but, in general, it takes between three and five years to come to market, start producing and then ramp up production.
