Saudi Petrochemical Companies Projected to Increase Profitability Over Next Two Quarters

SABIC accounted for approximately 69% of the sector’s net profits in Q2 2024, with an 85% growth. (SABIC)
SABIC accounted for approximately 69% of the sector’s net profits in Q2 2024, with an 85% growth. (SABIC)
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Saudi Petrochemical Companies Projected to Increase Profitability Over Next Two Quarters

SABIC accounted for approximately 69% of the sector’s net profits in Q2 2024, with an 85% growth. (SABIC)
SABIC accounted for approximately 69% of the sector’s net profits in Q2 2024, with an 85% growth. (SABIC)

Economic analysts predict that Saudi Arabia’s petrochemical companies will continue to post strong profits in their financial results for the next two quarters of 2024.

They noted that the financial results from the previous two quarters demonstrated solid operational efficiency, increased sales, and the sector’s ability to adapt to changing market conditions. This positive outlook is also supported by improving market conditions and rising demand for petrochemical products.

Companies in the petrochemical sector listed on the Saudi stock exchange (Tadawul) saw a significant increase in net profits by the end of Q2 2024, with a 62% rise to SAR 3.18 billion ($800 million), compared to SAR 1.96 billion ($500 million) during the same period in 2023—an increase of SAR 1.22 billion ($326 million).

This growth in profits is attributed to improved profit margins, higher average prices for key petrochemical products, and an increase in both production and sales volumes.

The sector comprises 11 companies, including SABIC, SABIC Agri-Nutrients, Yansab, Sipchem, Saudi Group, Nama Chemicals, Tasnee, Advanced, Alujain, Chemanol, and Kayan Saudi.

According to their financial disclosures on Tadawul, all sector companies posted net profits in the second quarter of 2024, except for Kayan Saudi and Chemanol, which reported losses of 36% and 177%, respectively.

SABIC accounted for approximately 69% of the sector’s net profits in Q2 2024, with an 85% growth, raising its profits to SAR 2.18 billion, compared to SAR 1.18 billion in Q2 2023. SABIC Agri-Nutrients ranked second in terms of profits, achieving SAR 705 million by the end of Q2 2024, up from SAR 651 million in the same period of 2023.

Yansab saw the highest profit growth among sector companies, with a remarkable 720% increase, reaching SAR 224.8 million in Q2 2024, compared to SAR 27.4 million in the same quarter of 2023.

Mohamed Hamdy Omar, CEO of G-World, told Asharq Al-Awsat that the petrochemical sector is crucial to the Saudi market. The sharp rise in net profits in Q2 2024, led by SABIC, reflects strong recovery and growth, with the sector reporting a 62.4% increase in profits.

He further expected this performance to boost investor confidence and align with Saudi Arabia’s economic diversification goals. However, he emphasized the need for sustained growth to confirm the positive trend, especially given the sector’s sensitivity to external factors such as global economic conditions, oil prices, and geopolitical developments. These factors must be closely monitored for a more comprehensive outlook.

Financial markets expert Obeid Al-Muqati predicted that some stocks within the sector, currently trading at lower market values, could achieve new highs.

He also noted that SABIC, as the leading stock in the sector, tends to reach new highs every two to three years.

He described SABIC as an attractive acquisition target, with the petrochemical sector poised for significant growth in the coming years, potentially surpassing its previous highs.

SABIC’s movement typically influences other companies in the sector, including those in cement, gas, and manufacturing, which are all part of the Basic Materials Index, comprising 45 companies, he added.



DMDF 2024 Explores Dynamics of Saudi Financial Market

A previous conference organized by the Saudi Financial Academy (Asharq Al-Awsat)
A previous conference organized by the Saudi Financial Academy (Asharq Al-Awsat)
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DMDF 2024 Explores Dynamics of Saudi Financial Market

A previous conference organized by the Saudi Financial Academy (Asharq Al-Awsat)
A previous conference organized by the Saudi Financial Academy (Asharq Al-Awsat)

The Debt Markets and Financial Derivatives Forum (DMDF 2024), set to launch on Sunday in Riyadh, will focus on key principles aimed at exploring the dynamics of the Saudi financial market.
Organized by the Financial Academy, the forum will be held under the patronage of Mohammed El-Kuwaiz, Chairman of the Capital Market Authority and the Board of Trustees of the Financial Academy, with the participation of industry leaders, experts, and specialists from the financial securities sector.
The forum will examine emerging trends and insights from experts and CEOs in the financial sector, contributing to the mission of the Financial Academy, which aims to leverage its resources to provide high-level specialized services that align with Saudi Arabia’s Vision 2030.
Mana bin Mohammed Al-Khamsan, CEO of the Financial Academy, told Asharq Al-Awsat that the forum comes in parallel with the Kingdom’s ongoing advancements, driven by Vision 2030, which seeks to achieve exceptional results across all areas, particularly the economic sector, a cornerstone of the country’s development.
Key Focus Areas
According to Al-Khamsan, the forum will address several major topics in the financial sector, including strategic partnerships with local and international exchanges, such as collaborations with the Saudi Tadawul Group and the Chicago Mercantile Exchange. It will also include partnerships with renowned international organizations like the CFA Institute and the International Capital Market Association (ICMA).
He added that a central focus will be on the debt and derivatives markets, which are expected to experience significant growth in the near future due to recent legal and regulatory reforms. These markets will play a crucial role in diversifying financing sources and improving liquidity.
The CEO of the Financial Academy also noted that the debt and derivatives markets in Saudi Arabia are experiencing rapid growth, and are expected to play a vital role in expanding funding sources and enhancing liquidity over the next few years.
Additionally, the official anticipated a rise in foreign investments in the Saudi financial market due to an improved regulatory environment and increased confidence among international investors.
Future Outlook
According to Al-Khamsan, the forum will shed light on these transformations through panel discussions and dialogues centered on future trends and challenges facing these markets. It will also present innovative solutions to keep pace with global financial market developments.
The forum aims to deliver measurable outcomes by tracking the impact of the Financial Academy’s initiatives on career development within the sector and fostering the principles of continuous professional training across the Kingdom’s financial industry, he underlined.
Al-Khamsan continued that the forum seeks to raise awareness and facilitate the exchange of expertise on modern financial instruments and risk management, while solidifying Saudi Arabia’s position as a leading investment destination regionally and globally. This will be achieved through collaboration with prestigious local and international entities such as the Saudi Tadawul Group, the Chicago Mercantile Exchange, and the CFA Institute.