RIYADH, 18 October 2005 — Saudi Basic Industries Corp.’s (SABIC) nine-month net profit rose 54 percent, the petrochemical company said yesterday, but third-quarter figures suggested SABIC’s galloping profit growth might be slowing.
The Middle East’s biggest petrochemical producer reported net profit for the first nine months of year reached SR14.7 billion ($3.92 billion). But net profit for the third quarter of SR4.8 billion was just 2 percent up on the second quarter and 14 percent up on the third quarter last year.
It also fell short of a forecast by Dubai-based Shuaa Capital, which last week forecast third-quarter net profit of SR5.18 billion.
SABIC said higher oil prices had pushed up costs of raw materials for some of its petrochemical products. A rise in iron ore and a fall in steel prices had also hit its subsidiary Saudi Iron and Steel Co.
But SABIC Chief Executive Mohamed Al-Mady said world petrochemical prices have risen and are expected to maintain those gains through next year.
Shares in the company, Saudi Arabia’s largest listed firm in terms of market value, closed yesterday’s morning trading session at SR1,641 compared to a record high of SR1,695 in August. Production volume rose 10 percent in the first nine months to 34.6 million tons while sales volume rose 6 percent to 26.9 million tons, SABIC said. Revenue increased 20 percent to SR56.7 billion.
SABIC plans to spend more than $20 billion over the next three years to expand its production and as much as $70 billion over the next 15 years, a senior executive said last month.
It aims to increase production levels to 64 million tons a year within three years and become the world’s biggest producer of ethylene glycol, which is used to make polyester and antifreeze.
SABIC benefits from cheap gas and feedstock supplies from state oil producer Saudi Aramco. Executives deny that it has an unfair advantage over competitors and say any petrochemical company could come to the kingdom and enjoy the same rates.
It plans to issue a SR1 billion domestic Sukuk, or Islamic bond, this year and last month was awarded ratings by Standard & Poors of A long-term and A-1 short term — the first step to a possible international bond issue which could help finance future growth.