SABIC second-quarter profit jumps to 10-year high as prices, volume increase

SABIC second-quarter profit jumps to 10-year high as prices, volume increase
SABIC is aiming to be the world’s largest petrochemical company by 2030. (Supplied)
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Updated 05 August 2021

SABIC second-quarter profit jumps to 10-year high as prices, volume increase

SABIC second-quarter profit jumps to 10-year high as prices, volume increase
  • Net profit jumped 57 percent to $2.04 billion in Q2
  • Selling prices increased 10 percent, sales volumes rose 3 percent

RIYADH: Saudi Basic Industries Corp. (SABIC) reported a surge in second-quarter profit as it sold more chemicals at higher prices than the previous quarter amid an increase in crude prices.

Net profit jumped 57 percent to a 10-year high of SR7.64 billion ($2.04 billion) in the three months to the end of June as revenue rose 13 percent to SR42.42 billion, SABIC said in a filing to the Tadawul stock exchange.

The Middle East’s largest petrochemicals producer posted a SR12.51 billion first-half profit on sales of SR79.95 billion, compared with a loss of SR3.27 billion on sales of SR54.81 billion in the same period last year.

Selling prices increased by 10 percent in the second quarter compared with the first three months of the year, while sales volumes rose 3 percent. Over the first half, sales prices were 48 percent higher and volumes were 2 percent lower compared with last year.

“SABIC’s financial performance in the second quarter was strong – continuing the margin improvement seen during the first quarter of 2021,” Yousef Abdullah Al-Benyan, vice chairman and CEO of SABIC, said in a statement to the Tadawul. “This was driven by higher sales volumes and prices, supported by a rise in oil prices and a healthy supply and demand balance for most of our key products as the global economy continued its path to recovery.”

SABIC achieved $230 million of synergies with Saudi Aramco since June 2020 when Aramco acquired a 70 percent stake in SABIC, driven by combining their purchasing power and sharing warehousing and logistics facilites.

In the second half of 2021, SABIC expects demand will continue to be strong in line with the recovery of the global economy. Margins will moderate, but remain healthy as oil prices and feedstock costs remain elevated while existing supply constraints ease and new supply capacity comes on line, it said in the filing.

SABIC will be targeting markets for its products in the US, China and Africa as they represent promising growth opportunities for its main sectorsm Al-Benyan said in a press conference after the earnings, Arabiya reported. 

The company has no plans to issue bonds ot other debt instruments but financial evaluation of the markets and the company’s position will continue, he said.


Saudi Arabia's blockchain market to grow 41 percent by 2025

Saudi Arabia's blockchain market to grow 41 percent by 2025
Updated 12 sec ago

Saudi Arabia's blockchain market to grow 41 percent by 2025

Saudi Arabia's blockchain market to grow 41 percent by 2025

Saudi Arabia's blockchain market is expected to grow by 41 percent between 2021 and 2025, according to estimates of the Kingdom's communications sector regulator.

The blockchain market surge is part of wider expected growth in the IT and emerging technology sector that will hit SR100 billion by 2025, with an annual compound growth rate of 10 percent, Saudi Press Agency reported, citing Raed Alfayez, vice-governor of emerging technologies at the Commission of Information Technology and Communication.

The market today has a size of SR65 billion, he added.

 


Surge in MENA’s SPAC activity counters IPOs drop, says Ernst & Young

Surge in MENA’s SPAC activity counters IPOs drop, says Ernst & Young
Updated 7 min 54 sec ago

Surge in MENA’s SPAC activity counters IPOs drop, says Ernst & Young

Surge in MENA’s SPAC activity counters IPOs drop, says Ernst & Young

Middle Eastern businesses are increasingly making use of the alternative route to public listing known as SPACs, a report by Ernst & Young has claimed.

The analysis shows a rise in activity involving special purpose acquisition companies (SPACs) and MENA-based firms.

SPACs are publicly listed companies created with the sole purpose of purchasing privately owned businesses, which therefore leads to its target to be listed. 

As well as private companies, sovereign wealth funds in the Middle East — including Saudi Arabia’s Public Investment Fund (PIF) and Abu Dhabi’s Mubadala — have also made use of SPACs, with PIF investing USD$75 million in NYSE-listed Compute Health in February.

Gregory Hughes, Ernst & Young MENA IPO and transaction diligence leader, said: “IPO activity during H1 2021 was below expectations, nevertheless the year did bring some remarkable deals with MENA companies showing an ever-increasing interest in SPAC transactions as a means to go public. We expect this trend to continue as companies seek to increase their international presence and gain access to a wider pool of investors.”

Among the MENA companies to go public this year after merging with SPACs were Abu Dhabi-based music streaming platform Anghami, and Dubai-headquartered transit firm Swvl Inc.

While SPAC activity was surging, the proceeds from initial public offerings (IPOs) across the region saw a year-on-year drop of 48 percent in the first half of 2021. 

Four IPOs raised USD$425.8 million, even though the number of listings stayed the same as 2020. 

Matthew Benson, EY MENA Strategy and Transactions Leader said that despite the drop, his company’s outlook on the region’s IPO activity “remains positive”.


European shares slide 1% to near two-month low on global growth worries

European shares slide 1% to near two-month low on global growth worries
Image: Shutterstock
Updated 31 min 53 sec ago

European shares slide 1% to near two-month low on global growth worries

European shares slide 1% to near two-month low on global growth worries
  • European shares sank 1 percent to a near two-month low on Monday
  • The benchmark European stocks index has now fallen for three straight weeks on worries about slowing global growth

European shares sank 1 percent to a near two-month low on Monday, tracking Asian equities lower, as investors feared major central banks would start giving cues about tapering their pandemic-era stimulus programs at various meetings this week.


The pan-European STOXX 600 index was down 1.4 percent in early trading, with energy and mining stocks leading declines on a slide in commodities prices.


The benchmark European stocks index has now fallen for three straight weeks on worries about slowing global growth and the spillover from tighter regulation of Chinese firms.


The U.S. Federal Reserve's policy meeting is in focus on Tuesday and Wednesday, where the central bank is expected to lay the groundwork for a tapering. On Thursday, the Bank of England holds its own policy meeting.


German shares slumped 1.6 percent as data showed a bigger-than-expected jump in producer prices last month.


In its biggest ever overhaul, the benchmark German index began trading on Monday with an increase in the number of constituents to 40 from 30.
 


Saudi remains China's top oil supplier as arrivals surge

Saudi remains China's top oil supplier as arrivals surge
Image: Shutterstock
Updated 39 min 43 sec ago

Saudi remains China's top oil supplier as arrivals surge

Saudi remains China's top oil supplier as arrivals surge
  • Saudi oil arrivals surged 53 percent from a year earlier to 8.06 million tonnes
  • Shipments from the United Arab Emirates fell nearly 40 percent year-on-year

Saudi Arabia, the world's biggest oil exporter, kept its ranking as China's top crude supplier for a ninth straight month in August as major producers relaxed production cuts.

Saudi oil arrivals surged 53 percent from a year earlier to 8.06 million tonnes, or 1.96 million barrels per day (bpd), data from the General Administration of Customs showed on Monday.

That compares with 1.58 million bpd in July and 1.24 million bpd in August last year.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, decided in July to ease production cuts and increase supply by a further 2 million bpd, adding 0.4 million bpd a month from August until December. In July, OPEC output increased by 640,000 bpd to 26.66 million bpd. read more

China's crude oil imports from Russia stood at 6.53 million tonnes in August, or 1.59 million bpd, flat versus 1.56 million bpd in July.

The big gap behind Saudi volumes was due to Beijing's decision to slash crude oil import quotas to its independent refiners, who favour Russia's ESPO blend.

Crude oil arrivals from Malaysia more than doubled from year-ago levels to 1.75 million tonnes, with traders saying refiners might have rebranded Venezuelan heavy oil previously passed on as bitumen blend into Malaysian crude after Beijing imposed hefty import taxes on blending fuels. read more

Meanwhile, shipments from the United Arab Emirates fell nearly 40 percent year-on-year, a possible sign demand for Iranian oil passed on as grades including UAE supplies remained lacklustre after peak arrivals early this year.

Official data has consistently recorded zero imports from Iran or Venezuela since the start of this year. 


Growth in ESG, Islamic investments support stronger asset inflows in the GCC: Moody’s

Growth in ESG, Islamic investments support stronger asset inflows in the GCC: Moody’s
Updated 20 September 2021

Growth in ESG, Islamic investments support stronger asset inflows in the GCC: Moody’s

Growth in ESG, Islamic investments support stronger asset inflows in the GCC: Moody’s
  • There will be a significant increase in demand for ESG-compliant investment products, around 38 percent of respondents said

DUBAI: The growing demand in Islamic and environmental, social, and governance (ESG)-compliant investments is expected to increase asset inflows over the next 12 months.

This is according to asset managers in Gulf countries, based on Moody’s 2021 survey of chief investment officers (CIOs) from eight leading fund firms.

“Half of CIO respondents expect double-digit growth in net inflows, and another 33% foresee a high single-digit increase,” Vanessa Robert, vice-president of senior credit officer at Moody’s Investors Service said.

“Improved investment results and stronger fees, already comparatively high in the GCC region, will further support revenue growth,” she added.

There will be a significant increase in demand for ESG-compliant investment products, around 38 percent of respondents said, while half of them expect sales of Islamic products will grow faster than sales of conventional investments in the next year.

The report also found around 50 percent of respondents said they were open to merger and acquisition activities within the next two years