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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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Saudi Transport, Logistics Sector Set for 10% Growth in Q2

An investor monitors a trading screen at the Saudi financial market in Riyadh. (AFP)
An investor monitors a trading screen at the Saudi financial market in Riyadh. (AFP)
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Saudi Transport, Logistics Sector Set for 10% Growth in Q2

An investor monitors a trading screen at the Saudi financial market in Riyadh. (AFP)
An investor monitors a trading screen at the Saudi financial market in Riyadh. (AFP)

As Saudi companies start reporting their Q2 financial results, experts are optimistic about the transport and logistics sector. They expect a 10% annual growth, with total net profits reaching around SAR 900 million ($240 million), driven by tourism and an economic corridor project.

In Q1, the seven listed transport and logistics companies in Saudi Arabia showed positive results, with combined profits increasing by 5.8% to SAR 818.7 million ($218 million) compared to the previous year.

Four companies reported profit growth, while three saw declines, including two with losses, according to Arbah Capital.

Al Rajhi Capital projects significant gains for Q2 compared to last year: Lumi Rental’s profits are expected to rise by 31% to SAR 65 million, SAL’s by 76% to SAR 192 million, and Theeb’s by 23% to SAR 37 million.

On the other hand, Aljazira Capital predicts a 13% decrease in Lumi Rental’s net profit to SAR 43 million, despite a 44% rise in revenue. This is due to higher operational costs post-IPO.

SAL’s annual profit is expected to grow by 76% to SAR 191.6 million, driven by a 29% increase in revenue and higher profit margins.

Aljazira Capital also expects a 2.8% drop in the sector’s net profit from Q1 due to lower profits for SAL and Seera, caused by reduced revenue and profit margins.

Mohammad Al Farraj, Head of Asset Management at Arbah Capital, told Asharq Al-Awsat that the sector’s continued profit growth is supported by seasonal factors like summer travel and higher demand for transport services.

He predicts Q2 profits will reach around SAR 900 million ($240 million), up 10% from Q1.

Al Farraj highlighted that the India-Middle East-Europe Economic Corridor (IMEC), linking India with the GCC and Europe, is expected to boost sector growth by improving trade and transport connections.

However, he warned that companies may still face challenges, including rising costs and workforce shortages.