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. 



Gold Extends Gains as Trump Tariffs Fuel Safe Haven Flows

Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo
Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo
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Gold Extends Gains as Trump Tariffs Fuel Safe Haven Flows

Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo
Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo

Gold prices rose for a second straight session on Tuesday, but traded below the recent all-time highs, as uncertainty around US President Donald Trump's tariff plans continued to fuel economic growth concerns and safe haven flows into bullion.

Spot gold gained 0.6% at $2,913.79 an ounce as of 0714 GMT. It hit a record high of $2,942.70 last week.

US gold futures added 0.9% to $2,925.50.

"Trump's disruptive modus operandi, aggressive rhetoric and tariffs - whether actual or threatened - could unravel global trade and intricate supply chains," said Nikos Tzabouras, senior financial writer at trading platform Tradu, Reuters reported.

"With uncertainty surrounding the global economy and the broader geopolitical landscape in the Trump 2.0 era, gold is set to remain a natural beneficiary of risk-off flows and central bank buying."

Since taking office last month, Trump has swiftly redrawn the global trade battlefield with a series of tariffs, while plans are already in motion for sweeping reciprocal tariffs, aimed squarely at any nation that taxes US products.

"Gold continues to benefit from the uncertainty surrounding the US. government's tariff policy. Central bank buying should also continue to provide support, even if there is no new data on this," Commerzbank analysts said in a note.

The market's focus has now shifted to the US Federal Reserve's January meeting minutes due on Wednesday for clues into the central bank's interest rate trajectory.

"Price gains are also supported by growing expectations that the Fed will cut rates in 2025 - a sentiment that gained further traction among traders after last week's disappointing US retail sales figures," Ricardo Evangelista, senior analyst at brokerage firm ActivTrades, said.

Bullion benefits from geopolitical and economic uncertainties, as well as rising price pressures, but higher interest rates diminish the asset's allure.

Spot silver fell 0.9% to $32.50 an ounce. Platinum jumped 0.9% to $985.20 and palladium climbed 1.6% to $978.00.