Saudi-listed petrochemical companies posted a sharp improvement in financial performance during the first quarter of 2026, driven by a strong recovery in operating efficiency that pushed the sector’s net profits up 111.75 percent to more than SAR374.36 million ($92.57 million).
The turnaround reflected the success of major companies in adapting to global market changes, with the sector’s operating profits surging nearly fivefold to $548.97 million.
The strong momentum was fueled by higher average selling prices for most products, lower operating and administrative expenses, improved investment returns and a decline in non-recurring costs that had weighed on last year’s results.
Among the nine petrochemical companies listed on the Saudi stock exchange, Tadawul, six posted net profits: SABIC, SABIC Agri-Nutrients, Yanbu National Petrochemical Co. (Yansab), Saudi Industrial Investment Group (SIIG), Advanced Petrochemical Co. and Alujain Corp.
Three companies posted losses: Sahara International Petrochemical Co. (Sipchem), National Industrialization Co. (Tasnee) and Saudi Kayan Petrochemical Co.
According to filings on Tadawul, SABIC Agri-Nutrients recorded the highest profits in the sector, with first-quarter earnings rising 24.57 percent to SAR1.23 billion from SAR985 million a year earlier. The company attributed the increase to higher average selling prices for most of its products.
SIIG posted the second-highest profits, reporting SAR252 million in first-quarter earnings compared with SAR18 million in the same period last year, a jump of 1,300 percent.
The company said profits rose because of a significant increase in its share of earnings from jointly managed companies, supported by exceptional improvements in product selling prices and lower depreciation expenses after reassessing the useful life of fixed assets.
Advanced Petrochemical ranked third among profitable companies despite a 58.33 percent decline in earnings, posting a net profit of SAR30 million compared with SAR72 million a year earlier.
The company attributed the drop to depreciation expenses, fixed costs and financing expenses linked to the start of operations at Advanced Polyolefins Industry Co.
The sector’s total operating profits rose nearly fivefold in the first quarter, climbing 492 percent to SAR2.06 billion from SAR347.56 million during the same period in 2025.
SABIC led the sector in operating profits, recording SAR1.4 billion in the first quarter, up more than 383 percent.
SABIC Agri-Nutrients came second with operating profits of SAR1.17 billion, an increase of 36.29 percent, while SIIG ranked third with SAR252 million in operating profit, marking a rise of 1,160 percent.
Financial markets analyst and member of the Saudi Economic Association Sulaiman Al-Humaid Al-Khalidi told Asharq Al-Awsat that the petrochemical sector saw a notable turnaround in the first quarter as major firms regained a significant portion of profitability momentum, supported by better product prices, improved operating efficiency and easing exceptional pressures that had weighed on results last year.
He noted that the sharp rise in earnings was driven by several factors, notably higher average selling prices for petrochemical products and fertilizers, especially at SABIC Agri-Nutrients, which benefited from strong global demand and stable fertilizer markets.
Lower operating expenses also played a major role in boosting results, particularly at SABIC, which returned to profitability after a decline in non-recurring costs and lower administrative and research expenses.
Al-Khalidi added that SIIG benefited from exceptional product pricing, stronger contributions from joint ventures and lower depreciation expenses, allowing it to post one of the sector’s strongest profit jumps.
At the same time, companies such as Saudi Kayan and Tasnee continued to face challenges despite reducing losses, reflecting a gradual improvement in operating conditions as some input costs declined and factories resumed operations after maintenance and expansion work.
Al-Khalidi said the sector appeared headed toward greater stability compared with 2024 and 2025, supported by improving global industrial demand, recovering economic activity in major markets and continuing Saudi industrial and economic transformation projects.
He added that any further rise in oil and energy prices would support profit margins for petrochemical companies as firms focus on improving operating efficiency, reducing costs and expanding higher value-added products.
He continued that the sector appeared to be entering a phase of “smart gradual recovery” rather than a temporary boom, potentially allowing companies to achieve more balanced and sustainable financial results in coming quarters.
Selective improvement
Mohamed Hamdy Omar, chief executive of G World, told Asharq Al-Awsat that the sector’s financial performance improved selectively rather than uniformly.
He said companies tied to strong pricing conditions or better operating factors posted stronger results, while firms burdened by high fixed costs or affected by maintenance and expansion projects remained under pressure.
He pointed to SABIC Agri-Nutrients benefiting from higher average selling prices despite lower sales volumes and weaker contributions from joint projects, indicating pricing had a greater impact on profitability than volumes.
Omar added that SIIG’s sharp profit increase was driven by stronger earnings contributions from jointly managed companies and lower depreciation expenses following the reassessment of asset lifespans.
He said SABIC’s return to profitability was largely driven by lower non-recurring expenses that had burdened the comparison period in 2025, along with lower general and research expenses.
Omar further noted that profit growth across the sector was mainly driven by three factors: improved selling prices for some products, especially fertilizers; stronger operating and investment performance at some companies; and lower non-recurring costs, which particularly benefited SABIC.
Loss-making companies, meanwhile, remained under pressure from lower sales volumes, weaker prices, higher financing expenses and maintenance and expansion costs, as seen at Tasnee and Saudi Kayan, he said.
Omar expected the petrochemical sector to remain highly sensitive in coming quarters to global price movements in petrochemicals, fertilizers and energy markets.
“Volatility between companies may continue even if the overall trend remains positive,” he said, adding that stronger firms with pricing power and operating efficiency, such as SABIC Agri-Nutrients, would be best positioned to maintain healthy margins if market conditions remain supportive.
Omar added that SABIC would remain a key factor in shaping the sector’s direction, though sustaining profitability would depend more on reducing non-recurring items and improving the global industrial cycle than on any single factor.
“The sector is entering a phase of improving operating quality rather than merely a rapid cyclical recovery,” he said, adding that the sustainability of the recovery would depend on prices, global demand and disciplined capital and operating spending.
