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.


Davos 2019: Mideast CEOs turn gloomy on global economy, PwC study finds

Political and business leaders are gathering in the mountain resort of Davos in Switzerland this week. (AP)
Updated 22 January 2019
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Davos 2019: Mideast CEOs turn gloomy on global economy, PwC study finds

  • The loss of confidence from regional CEOs was the second biggest fall in the world, beaten only by North American bosses, whose optimism fell from 63 percent to 37 percent

DAVOS: Chief executives in the Middle East are much less confident on prospects for the global economy than they were in 2018, according to a report from accounting and consulting group PwC.

The firm’s annual survey of top bosses’ attitudes, traditionally launched on the eve of the World Economic Forum Annual Meeting in Davos, showed a big drop in the number of CEOs from the region who believe global economic growth will improve in the next 12 months.

Only 28 percent of Middle East business leaders now see an improvement in economic prospects, compared with 52 percent this time last year. Bob Moritz, global chairman of PwC, said: “The prevailing sentiment this year is one of caution in the face of increasing uncertainty.”

The loss of confidence from regional CEOs was the second biggest fall in the world, beaten only by North American bosses, whose optimism fell from 63 percent to 37 percent.

PwC said that the Middle East decline was due to “increased regional economic uncertainty,” while the North American fall was “likely due to the fading of fiscal stimulus and emerging trade tensions.”

The results of the PwC poll - conducted among 1,300 business leaders around the world - reflected an overall decline in business confidence in each region surveyed. Last year, only 5 percent of CEOs said that global economic growth would decline. For 2019, this has jumped to nearly 30 percent.

Globally, confidence in CEOs’ own companies to grow revenue this year has also fallen sharply. Moritz said: “With the rise in trade tension and protectionism it stands to reason that confidence is waning.”

The US retains its lead as the top market for growth among international investors, but many CEOs are turning to other markets, or investing at home. The ongoing trade conflict between the US and China has resulted in a sharp decline in the number of Chinese bosses chosing the US as a market for growth, down from 59 percent last year to only 17 percent for 2019.

Globally, CEOs are still more worried about the threat of over-regulation of their businesses - named as the top concern again in 2019 - but uncertainty about policy has become a major issue too.

In the Middle East, the main concern is geopolitical uncertainty, followed by the threat of cyberattack, policy uncertainty and the speed of technological change.