RIYADH, 20 January 2005 — Petrochemicals giant Saudi Basic Industries Corp (SABIC) said yesterday that its net profit rose 113 percent last year to a record SR14.25 billion ($3.80 billion) on the back of high global prices for its products.
The company said it was able to double its profit even after taking a SR1.56 billion hit from a US court order to compensate Exxon Mobil Corp. in a dispute over their joint operations in Saudi Arabia.
Fourth-quarter profit before allocations for the Exxon Mobil payments surged to SR5.95 billion, three times higher than the same period in 2003, SABIC said.
The company’s shares climbed 9 percent on the results to close at SR919, just shy of a 12-month high of SR926 reached in November. “This is the highest ever profit earned by SABIC since its inception,” Chief Executive Mohamed Al-Mady said.
Returns were boosted by high world prices for SABIC products, which include basic chemicals, polyolefins, fertilizers and metals, as well as by steps taken to integrate the firm’s diverse business activities, he added. Other factors were technology upgrades, lower operation costs and improved marketing and customer development, he said.
Analysts said SABIC’s chief advantage was access to cheap petroleum products used as feedstock for its plants in the Kingdom.
SABIC’s main plants are at the industrial site of Jubail and the Red Sea Yanbu complex but it has moved into Europe and plans further expansion in Asia and Latin America.
Officials have said SABIC investment in China could reach between $2 billion and $5 billion. The company has also approved a SR24 billion budget for projects to be completed within Saudi Arabia by 2008. It also plans to issue a bond of up to $1 billion later this year — the Kingdom’s first major corporate bond.
SABIC’s revenue rose to SR68.74 billion in 2004, a 47 percent gain on the previous year, making it the Middle East’s biggest manufacturing firm in terms of revenue, Mady said.
SABIC is Saudi Arabia’s largest listed company, accounting for nearly one-quarter of the capitalization of the Arab world’s biggest bourse.
The government owns 70 percent of SABIC shares, with the remaining 30 percent held by private investors in Saudi Arabia and other countries of the Gulf Cooperation Council.