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.
