Saudi Kayan suffers loss of SR624 million

Saudi Kayan suffers loss of SR624 million
Updated 15 January 2016

Saudi Kayan suffers loss of SR624 million

Saudi Kayan suffers loss of SR624 million

ALKHOBAR: Saudi Kayan Petrochemical Co. reported a net loss in the fourth-quarter, the fourth straight quarter it failed to achieve a profit, hurt by product prices that have tumbled along with feedstock oil.
The company, an affiliate of Saudi Basic Industries Corp. (SABIC) and the first major petrochemicals firm in the Kingdom to report earnings, had a net loss of SR624.1 million ($166.3 million) in the three months to Dec. 31, it said in a bourse statement.
That compared with a profit of SR11.78 million in the same period of 2014.
Kayan cited a drop in the average selling prices of most products as the main reason for the fourth-quarter loss, as well as an impairment on its spare parts inventory.
These factors outweighed the benefits of a drop in feedstock costs, an increase in overall sales volume and a drop in marketing fees from SABIC, it said, without providing sales figures.
Saudi companies issue brief earnings statements early in the reporting period before publishing more detailed results later.
Like many petrochemical firms in the Kingdom, Kayan's earnings have been hit hard by falling product prices as they are closely tied to the price of oil, which is languishing at 12-year lows. Saudi producers have also benefited from subsidized energy and feedstock costs, so lower crude prices compress their profit margins.
Kayan's results could have been worse. Maintenance work at some of its plants originally due to take place in October to March 2016 was rescheduled. This had been expected to cost the firm SR340 million.
Its 2015 annual loss widened substantially to SR1.24 billion, which Kayan blamed on lower product prices as well as a drop in production and sales from maintenance work in February.
The company had expected maintenance to cost them SR62 million.
It reported a loss of SR44.5 million in 2014.
Parent firm SABIC, one of the world's largest petrochemical companies, reports its fourth-quarter earnings on Monday.