The Saudi Basic Industries Corporation (SABIC), one of the largest petrochemical companies in the world, recorded a net loss of SAR2.77 billion ($739 million) for the year 2023, at a time when the company faces a challenging operating environment.
“The petrochemical industry navigates a challenging operating environment,” SABIC Chief Executive Officer Abdulrahman Al-Fageeh said on Tuesday.
He added: “Underwhelming demand within our target market led to lower year-end product prices.”
On the other hand, Al-Fageeh noted that SABIC achieved profits from its main ongoing operations, amounting to SAR1.31 billion, compared to SAR15.79 billion during the previous year, which reflects the company’s financial strength in light of the current economic conditions and the impact of the sale of the Hadeed steel company last year.
These numbers highlight the extent of the challenge facing petrochemical companies as they grapple with market weakness, slow economic growth, and falling prices.
SABIC’s financial results coincided with the announcement by Moody’s credit ratings agency that SABIC, stc and SEC were rated at A1 with “positive” outlooks, while Maaden was assigned a Baa1 with a “stable” outlook.
SABIC said in its financial results statement published on the Saudi Stock Exchange (Tadawul) website that the net loss was due to discontinued operations amounting to around SAR4 billion, driven mainly from the fair valuation of its subsidiary Saudi Iron and Steel Company (Hadeed) amounting to SAR2.93 billion, as well as its lower financial performance during the current year.
The company achieved profits from ongoing main operations, amounting to SAR1.3 billion, compared to SAR15.7 billion during 2022, mainly due to several factors, including: the drop in profit margins for most of the main products and the impairment charges and write-offs of certain capital and financial assets, as well as provisions for the restructuring program in Europe and constructive obligations.
Al-Fageeh noted that the petrochemical industry was going through a challenging operating environment, pointing to “considerable uncertainty heading into the first quarter of 2024.”
He said that the company was committed to deploy between $4 and $5 billion in capital expenditure in 2024, adding that SABIC would strive to maintain dividend distributions to shareholders without compromising the robust balance sheet.
