Saudi petchems firms SIIG and Petrochem, which are contemplating a merger amid tough market conditions, returned to profit in the third quarter. SIIG made a net profit of SR85mn ($22.7mn) in 3Q20 after a loss of $14.7mn in 2Q20. Petrochem’s 3Q20 net profit of $31.2mn followed a $50.4mn loss in 2Q20. But both firms’ Q3 profits were well down on year-ago levels (SIIG reported a $42.7mn profit and Petrochem $45.6mn for 3Q19). SIIG attributed the year-on-year decline to a sharp decrease in product prices due to the global Covid-19 pandemic. Petrochem permanently shut down its polystyrene unit, reducing net income by $67.7mn.
While the improved results may reduce the immediate pressure to combine, the complex relationship between the two companies suggests that there may be attractive synergies in merging. SIIG is Petrochem’s largest shareholder with 50% and the two firms are partners with US petchems JV Chevron Phillips in a numbers of plants at Jubail (MEES, 25 September). (CONTINUED - 159 WORDS)