SABIC eyes overseas expansion as outlook improves

The view from SABIC headquarters in Riyadh is much improved thanks to increased global demand for the petrochemicals it makes. (Courtesy of SABIC)
Updated 29 July 2018
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SABIC eyes overseas expansion as outlook improves

  • First half was "very positive" says CEO
  • Profits surge 81 percent in second quarter

RIYADH: Saudi Basic Industries Corp. (SABIC) said on Sunday it expects positive growth in the second half of this year, backed by an increase in production and enhanced global economic outlook.

The comments came after SABIC reported an 81 percent leap in second-quarter net profit, citing higher selling prices and a jump in sales volumes.

The first half of 2018 was “very positive” and SABIC expects the second half of the year to be “equally positive,” CEO Yousef Al-Benyan told a news conference.

SABIC has been a focus of investor attention after Reuters reported earlier this month that Saudi national oil giant Aramco aimed to buy a stake in SABIC, possibly taking the entire 70 percent holding owned by Saudi Arabia’s sovereign wealth fund, Public Investment Fund (PIF). Aramco subsequently confirmed the report.

Benyan said on Sunday that talks on the potential acquisition of a stake in his company are taking place solely between Aramco and PIF.

“Hard to expect anything in this regard — Aramco-PIF talks are between an owner and a future investor,” Yousef Al-Benyan told a news conference. “I can assure you we have trust in our regulators.”

SABIC posted a net profit of SR6.70 billion ($1.79 billion) in the three months to June 30, up from SR3.71 billion in the year-earlier period, beating average analyst forecasts of a 5.8 billion riyals net profit.

Benyan said the company’s production rose about 1.5 million tons in the first half of the year and is expected to rise to three million tons by year-end.

Quarterly sales climbed 26 percent from a year earlier to SR43.28 billion, and were up three percent from the previous quarter.

SABIC’s results are closely tied to oil prices and global economic growth because its products — plastics, fertilizers and metals — are used extensively in construction, agriculture, industry and the manufacturing of consumer goods.

The petrochemical giant has plans to expand its presence in global markets; specifically in North America, China and North Africa, Benyan said, adding that the company is looking at various options, without giving further details.

In Europe, the company is still committed to its investment in Clariant, and is awaiting antitrust approvals for acquiring a 25 percent stake in the Swiss speciality chemical maker which was announced in January, Benyan said.

Earlier this month, Clariant CEO said his company’s update on its ties with SABIC is likely to be delayed as antitrust approvals take longer than expected.


Paris Air Show: After Boeing showstopper, Airbus seeks order bounce

Updated 19 June 2019
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Paris Air Show: After Boeing showstopper, Airbus seeks order bounce

  • British Airways owner IAG signs letter of intent to buy 200 of its 737 MAX jets
  • Airbus is looking for up to 200 orders for the A321XLR, which is designed to open up new routes

PARIS: Airbus, reeling from the potential loss of a major customer for its best-selling A320neo as British Airways owner IAG placed a lifeline order for the grounded 737 MAX, prepared to hit back with more orders for its A321XLR on Wednesday.
The planemaker has been negotiating with US airlines investor Bill Franke whose Indigo Partners has also been known to place orders for multiple airlines within its portfolio and could reel it in for the Paris Air Show, industry sources said.
Airbus declined to comment.
After weathering intense scrutiny over safety and its public image, Boeing won a vote of confidence on Tuesday as IAG signed a letter of intent to buy 200 of its 737 MAX jets that have been grounded since March after two deadly crashes.
The surprise order lifted the energy of a previously subdued Paris Airshow, where the talk had been of the possible end of the aerospace cycle, given the issues at both Boeing and Airbus as well as geopolitical and trade tensions around the world.
Australia’s Qantas Airways said on Tuesday it would order 10 Airbus new A321XLR jets and convert a further 26 from existing orders already on the Airbus books.
Airbus is also in talks with leasing company GECAS and has been trying to secure an eye-catching order for the A321XLR from American Airlines, though the world’s largest carrier does not typically make announcements at air shows.
Airbus is looking for up to 200 orders for the A321XLR, which is designed to open up new routes.