SABIC Marks Q4 Loss, $1.5 Bn Profits in 2019

The headquarters of Saudi Basic Industries Corp (SABIC) is seen in Riyadh, Saudi Arabia (File photo: Reuters)
The headquarters of Saudi Basic Industries Corp (SABIC) is seen in Riyadh, Saudi Arabia (File photo: Reuters)
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SABIC Marks Q4 Loss, $1.5 Bn Profits in 2019

The headquarters of Saudi Basic Industries Corp (SABIC) is seen in Riyadh, Saudi Arabia (File photo: Reuters)
The headquarters of Saudi Basic Industries Corp (SABIC) is seen in Riyadh, Saudi Arabia (File photo: Reuters)

Saudi Basic Industries Corp (SABIC), one of the largest petrochemical manufacturers in the world, reported a 74 percent decline in profits and a SR5.6 billion ($1.5 billion) annual profit.

SABIC reported a rare loss of SR720 million ($192 million) in the fourth-quarter, compared with a profit exceeding SR3.2 billion in Q4 of 2018, adding that the results were negatively impacted by a decline in petrochemical prices driven by oversupply in key products and slowing global growth coupled with seasonal impacts.

Ibn Rushd, SABIC’s affiliate, was also impacted by a SR2.8 billion impairment provision.

During a press conference, SABIC CEO and Vice Chairman Yousef al-Benyan asserted that the petrochemical industry was negatively impacted in 2019 by additional new supply in key products coming on-stream coupled with a moderation in global growth compared to 2018.

“We are in a cyclical industry and the challenges are not new to SABIC. Our strategy is geared toward stable and long-term growth, and enables us to remain resilient to the headwinds.”

Benyan said that despite the tough operating environment, the company had announced a dividend distribution of SR2.2 per share for H2 of last year, similar to H1 of 2019.

“Going forward our dividend will continue to be supported by a disciplined approach to capital allocation and by sustaining a strong balance sheet.”

Benyan pointed out that sustainability and innovation are critical factors for SABIC's success, and directing it towards enhancing the value of its brand, which recently witnessed a 9.3 percent increase to reach $4.3 billion in 2020, according to Brand Finance International.

In 2019, SABIC successfully merged two of its wholly owned affiliates, Saudi Petrochemical Company (Sadaf) and Arabian Petrochemical Company (Petrokemya), as part of the company’s strategy to increase efficiency and competitiveness of its operations.

SABIC also signed an agreement with the Japan Saudi Arabia Methanol Company (JSMC) to renew the partnership with the Saudi Methanol Company, Ar-Razi, for another 20 years, increasing its stake to 75 percent.

In June 2019, ExxonMobil and SABIC announced the decision to proceed with the construction of a chemical facility and a 1.8 million metric ton ethane steam cracker, two polyethylene units, and a monoethylene glycol unit in San Patricio County, Texas, leading to thousands of high-paying jobs and billions in economic output.

In addition, SABIC was placed in the top one percent of best performers in the industrial category 'Basic Chemicals, Fertilizers, Plastics & Synthetic Rubber Companies' last month by EcoVadis, the world's most trusted provider of business sustainability ratings.

EcoVadis evaluated the sustainability and CSR performance of over 30,000 companies worldwide in its third edition of the Global CSR Risk and Performance Index. 



Oil Prices Reset as Supply Uncertainty Reigns

FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
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Oil Prices Reset as Supply Uncertainty Reigns

FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)

Oil lost early gains on Tuesday and prices were back near their previous close in the face of uncertainty over how supply will be affected by Ukraine-Russia peace talks, international trade tariffs and OPEC+ crude output.

Brent crude futures were up only 1 cent at $75.23 per barrel by 1242 GMT, retreating from $76.07 earlier in the session.

US West Texas Intermediate crude futures were up 51 cents from Friday's close to $71.25 a barrel. There was no settlement for WTI on Monday because of the US Presidents' Day holiday, Reuters reported.

"Each rally seems to find willing sellers, whether or not it is because of neighbouring technical numbers that keep movement trapped or notions of a war settlement topped with tariffs is hard to tell," said John Evans of oil broker PVM.

"Day trading and short-term flows are ruling the fate of oil prices at present."

US and Russian officials held more than four hours of talks in Riyadh on Tuesday, their first on ending the war in Ukraine. But Moscow made a new demand: that NATO cancel its 2008 promise on Ukraine membership.

Ukraine was not at the talks and has said that no peace deals can be made on its behalf.

If a deal is reached, Washington and its allies could abandon sanctions throttling the supply of Russian oil to the world.

Oil prices were bolstered on Tuesday by a Ukrainian drone attack on a Russian pipeline that pumps about 1% of global crude supply.

The damage could reduce oil transit volumes from Kazakhstan by about 30% and take up to two months to repair, Russian oil transport company Transneft said.

Another question hanging over oil markets is whether OPEC+ is considering a delay to monthly supply increases scheduled in April.

Russian state media said the group's members were not looking to hold off from the increases after Bloomberg News reported that OPEC+ members were exploring a possible delay.