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Aramco, SABIC Plan Strategic Organization of Product Sales, Marketing

SABIC announces first-quarter earnings jump and discloses a reorganization of marketing activity with Saud Aramco. (Asharq Al-Awsat)
SABIC announces first-quarter earnings jump and discloses a reorganization of marketing activity with Saud Aramco. (Asharq Al-Awsat)
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Aramco, SABIC Plan Strategic Organization of Product Sales, Marketing

SABIC announces first-quarter earnings jump and discloses a reorganization of marketing activity with Saud Aramco. (Asharq Al-Awsat)
SABIC announces first-quarter earnings jump and discloses a reorganization of marketing activity with Saud Aramco. (Asharq Al-Awsat)

On the same day it announced a plan to realign product sales and marketing with Saudi Aramco, the Saudi Basic Industries Corp (SABIC) reported first-quarter net profit of around SAR 4.8 billion ($1.2 billion).

Meanwhile, the sales and marketing for a number of Aramco petrochemicals and polymers products will move to SABIC, and the offtake and resale responsibility of a number of SABIC products will transfer to Aramco Trading Company (ATC) under a plan revealed on Thursday.

The effect of these changes, planned to be implemented on a phased basis during 2021 will focus SABIC on petrochemicals products and ATC on fuel product, said a joint statement.

“The transfers reflect our shared commitment to capitalize on the complementary nature of Aramco and SABIC’s respective product portfolios as we strive to create added value for our customers and shareholders,” said Ibrahim Al-Buainain, Aramco Trading Company President and CEO.

It represents the latest move to integrate the strategies of both companies following Aramco’s acquisition of a 70% stake in SABIC in June 2020.

Aramco and SABIC will continue to review options for further global marketing and sales transfers across product-producing companies within the Aramco group portfolio, they said.

The changes will drive further operational efficiencies, strengthen the brands of both companies and their combined products and services offering, and help to maintain competitiveness. Customers will benefit from improved product range and availability, ordering and points of sale, supply chain, shipping reliability, and after-market services and solutions.

“By leveraging and optimizing our complementary combined product portfolios we will create a one-stop shop for the benefit of our customers globally, including in strategically important geographies, especially across Asia,” said SABIC Executive Vice President Abdulrahman Al-Fageeh.

“These marketing and sales transfers and operational changes are intended to put us closer to market, driving greater agility and flexibility to deliver added value to customers and power their ambition,” he added.

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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)

Telecommunications companies listed on the Saudi Stock Exchange (Tadawul) achieved a 12.46 percent growth in their net profits, which reached SAR 4.07 billion ($1.09 billion) during the second quarter of 2024, compared to SAR 3.62 billion ($965 million) during the same period last year.

They also recorded a 4.76 percent growth in revenues during the same quarter, after achieving sales worth more than SAR 26.18 billion ($7 billion), compared to SAR 24.99 billion ($6.66 billion) in the same quarter of 2023.

The growth in the revenues and net profitability is the result of several factors, including the increase in sales volume and revenues, especially in the business sector and fifth generation services, as well as the decrease in operating expenses and the focus on improving operational efficiency, controlling costs, and moving towards investment in infrastructure.

The sector comprises four companies, three of which conclude their fiscal year in December: Saudi Telecom Company (STC), Mobily, and Zain Saudi Arabia. The fiscal year of Etihad Atheeb Telecommunications Company (GO) ends on March 31.

According to its financial results announced on Tadawul, Etihad Etisalat Company (Mobily) achieved a 33 percent growth rate of profits, bringing its profits to SAR 661 million by the end of the second quarter of 2024, compared to SAR 497 million during the same period in 2023. The company also achieved a 4.59 percent growth in revenues to reach SAR 4.47 billion, compared to SAR 4.27 billion in the same quarter of last year.

The Saudi Telecom Company achieved the highest net profits among the sector’s companies, at about SAR 3.304 billion in the second quarter of 2024, compared to SAR 3.008 billion in the same quarter of 2023. The company registered a growth of 4.52 percent in revenues.

On the other hand, the revenues of the Saudi Mobile Telecommunications Company (Zain Saudi Arabia) increased by about 6.69 percent, as it recorded SAR 2.55 billion during the second quarter of 2024, compared to SAR 2.39 billion in the same period last year.

Commenting on the quarterly results of the sector’s companies, and the varying net profits, the head of asset management at Rassanah Capital, Thamer Al-Saeed, told Asharq Al-Awsat that the Saudi Telecom Company remains the sector leader in terms of customer base expansion.

He also noted the continued efforts of Mobily and Zain to offer many diverse products and other services.

Financial advisor at the Arab Trader Mohammed Al-Maymouni said the financial results of telecom sector companies have maintained a steady growth, up to 12 percent, adding that Mobily witnessed strong progress compared to the rest of the companies, despite the great competition which affected its revenues.

He added that Zain was moving at a good pace and its revenues have improved during the second quarter of 2024. However, its profits were affected by an increase in the financing cost by SAR 26.5 million riyals and a rise in interest, while net income declined significantly compared to the previous year, during which the company made exceptional returns.