SABIC upbeat on new projects; reviews global growth outlook

The current construction boom in the Kingdom enhances the gains of Saudi Basic Industries Corp. (SABIC), says its Vice-Chairman and CEO Mohamed Al-Mady.
He said although the company sold its products in the US currency, “it will not have a negative effect since the Saudi economy is strong.”
He was speaking at a news conference in Riyadh.
The company’s manufacturing, sales, technology and innovation facilities are located throughout the globe and are managed by four regional offices in the Middle East and Africa region, Asia, the Americas and Europe.
SABIC manufactures more than 150 products and Al-Mady said he was optimistic of the company’s future programs and hoped that things would improve in the coming years.
In four year’s time, there will be definite results from the plastic project of the company, he said, adding that the company had hired qualified researchers who could help map out SABIC’s future programs and projects.
SABIC is reviewing its global growth outlook, especially in light of the weak economic situation in Europe, Reuters quoted the CEO as saying.
He described Europe as a “special case” and said the continent would remain a very important market for the company, even in bad times.
Al-Mady said he could not predict global petrochemical prices for this year but thought 2013 would be similar to 2012, with improvement in prices occurring after 2013.
A SABIC statement said the petrochemical giant posted a 10 percent year-on-year fall in its first quarter net profit.
The dip in profits was mostly due to lower production and sales volumes because of planned maintenance at factories of some affiliates, it said in the statement.
“I am hopeful about the future but you need the time for shake out (of global economic difficulties), which is this year. Once we shake out these things, we will come back to good recovery in the next couple of years,” Al-Mady said at the press conference.
Net income for the three months to March 31 was SR 6.56 billion compared to SR 7.27 billion in the same period last year. SABIC’s sales were SR 46.74 billion, a 3.3 percent dip from the SR 48.34 billion sales in the first quarter of 2012.
SABIC, however, said first-quarter profit had risen from SR 5.83 billion in the fourth quarter of 2012. It cited higher sales prices of some products.
Al-Mady said he could not predict global petrochemical prices for this year but thought 2013 would be similar to 2012, with improvement in prices occurring after 2013.
The company is reviewing its global growth outlook, especially in light of the weak economic situation in Europe, he added.
The performance of SABIC is closely tied to the world economy because its products are used extensively in construction, car manufacturing and other major consumer goods.
Last Thursday, the company said it planned to cut 1,050 jobs in Europe and close some operations there because lower consumer spending had hit demand.
Al-Mady recently was quoted as saying in media reports that European operations faced increased competition from the US, where development of shale gas has cut natural gas prices, and Asia, where production and consumption have been rising.
Al-Mady said SABIC is looking at opportunities in the US to build a plant using shale gas feedstock, but had not yet decided how to do so.
Chief Financial Officer Mutlaq Al-Morished said at the news conference that SABIC was not looking for additional financing at the present, but might consider taking more debt to fund projects late this year or early in 2014.
SABIC affiliates in Saudi Arabia reported mixed earnings last week. Saudi Arabian Fertilizers Co. (SAFCO) posted an 18 percent jump in first-quarter net profit to SR 932 million.
Yanbu National Petrochemical Co. (Yansab), a large olefins producer, said its net profit fell 7.4 percent. Saudi Kayan, where full-scale production is expected to start this year, said its net loss for the quarter more than doubled to SR 155 million.