JEDDAH, 20 July 2005 — The Saudi Basic Industries Corporation (SABIC), the largest petrochemical producer in the Middle East, announced yesterday its net profits for the first half of 2005 of SR9.8 billion ($2.6 billion), an increase of 84 percent for the same period last year.
Traders have been waiting in anticipation of SABIC’s announcement amid rumors that its profits for the first half would be less than last year which contributed to the downward trend in trade volume during the past few days. This encouraging announcement from SABIC could wake the market from its slumber since it is the largest company in the market and the most influential.
The Saudi shares bounced back yesterday. The Tadawul All-Share Index (TASI) closed at 12,071.39, up 488.77 points or 4.22 percent.
On Monday, the Saudi stocks index plunged more than 4 percent to close at 11,582.62 points. The SABIC stock closed yesterday at SR1,191.00, up from SR1,134.00 on Monday, compared with a year-high of SR1,495.3 in April and a low of SR624.8 in January.
SABIC made SR4.8 billion in net profits during the second quarter compared to SR5.1 billion in the first, according to Vice Chairman and CEO Mohamed Al-Mady. He said these profits reflect SABIC’s efforts of increasing its productive and marketing operations while decreasing expenses. “The increase in profits for this year’s first half compared to the same period last year is due to the international higher prices of the company’s products,” said Al-Mady.
As for the decrease in profits during the second quarter compared to the first, he said despite the increase in sales the decrease in profits is due to international decline in prices of most petrochemical products which began to improve early July.
The company’s income for the first half reached SR37 billion compared to SR29 billion for the same period last year. Total production reached 22.51 million metric tons after Mutahida Complex entered its first production stage which adds more than two million metric tons annually.
Sales reached 17.4 million metric tons, an increase of 10 percent for the same period last year. Al-Mady said the company is continuing its implementation of expansion projects that aim to achieve a total annual production capacity of 60 million metric tons in 2008 as well as continuing to consider compelling investment opportunities inside the Kingdom or abroad.
