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.


Abu Dhabi aims to lure start-ups with investment in new technology hub

Updated 56 min 44 sec ago
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Abu Dhabi aims to lure start-ups with investment in new technology hub

  • The initiative will help Abu Dhabi reduce reliance on oil
  • Mubadala hopes to attract Chinese and Indian companies

ABU DHABI: Abu Dhabi will commit up to $272 million to support technology start-ups, it said on Sunday, in a dedicated hub as part of efforts to diversify its economy.

US tech giant Microsoft will be a strategic partner, providing technology and cloud services to the businesses that join the hub as the capital of the United Arab Emirates continues its push to reduce reliance on oil revenue.
Abu Dhabi derives about 50 percent of its real gross domestic product and about 90 percent of central government revenue from the hydrocarbon sector, according to ratings agency S&P.
The emirate launched a $13.6 billion stimulus fund, Ghadan 21, in September last year to accelerate economic growth. Ghadan means tomorrow in Arabic. The new initiative, named Hub 71, is linked to Ghadan will also involve the launch of a $136 million fund to invest in start-ups, said Ibrahim Ajami, head of Mubadala Ventures, the technology arm of Mubadala Investment Co.
The goal is to have 100 companies over the next three to five years, Ajami said. “The market opportunities in this region are immense,” he added.
Mubadala, with assets of $225 billion and a big investor in tech companies, will act as the driver of the hub, located in the emirate’s financial district.
Softbank will be active in the hub and support the expansion of companies in which it has invested, Ajami said, adding that Mubadala is also aiming to attract Chinese and Indian companies, among others.
Mubadala which has committed $15 billion to the Softbank Vision Fund, plans to launch a $400 million fund to invest in leading European technology companies.
Incentives mapped out by the government include housing, office space and health insurance as part of the $272 million commitment, Ajami said.
Abu Dhabi will also announce a new research and development initiative on Monday linked to the Ghadan 21 plan, according to an invitation sent to journalists.