Saudi Petchem Firms Slide Further In Tough Market, Sabic Looks To Consolidate

Saudi petchems firms are seeing profits undermined by weak products prices leading Sabic to ponder further restructuring in search of increased efficiency.

Saudi petrochemicals producers saw net profits rally strongly in the first quarter of 2016 versus Q4 2015, although profits were down by almost 5% on a year earlier (see table). Net Q1 profits for the kingdom’s 14 listed petchems firms totaled SR4.16bn ($1.12bn), down 4.8% on Q1 2015 but 127% up on Q4 2015, when shutdowns at a number of plants took place.

The firms ended the quarter with a combined market capitalization 4.7% below end-2015. Size is no protection from the turbulent global markets – even Sabic is looking to rejig its operations in an industry battered by low product prices and increased global competition.

Sabic acting chief executive Yusuf al-Binyan says the firm is looking to “consolidate operations, bring more efficiency and reduce cost without impacting our liability or our quality of delivery.” Sabic recently broke up its Innovate Plastics business unit, putting its commodity and specialty products into different units with “differing technology priorities” (MEES, 16 October 2015). (CONTINUED - 572 WORDS)

DATA INSIDE THIS ARTICLE

table Saudi Petrochemicals Sector Net Profits/Losses (Sr Mn)