RIYADH, 16 January 2008 — Saudi Basic Industries Corp. (SABIC) should hold back from raising domestic fertilizers prices, a newspaper quoted an agriculture ministry official yesterday as saying.
“For SABIC to raise prices (of fertilizers) is something that cannot be logically justified, and it cannot use global prices of its products as a benchmark for local prices,” Al-Eqtisadiah quoted Abdallah Al-Obaid, the agriculture ministry’s secretary for research, as saying.
Past increases in domestic fertilizer prices boosted food prices, he said, according to the paper.
Saudi Arabia is battling a surge in inflation, which hit 5.4 percent in October.
Saudi Arabian Fertilizers Co more than doubled fourth-quarter profit on higher output and prices.
Saudi Arabian Fertilizers, or SAFCO, is 42 percent owned by SABIC. Safco expanded capacity at a project in the second quarter, boosting sales, it said in a statement on the bourse website.
SAFCO made a profit of SR741.5 million ($197.7 million) in the fourth quarter, a 135.7 percent increase from the year-earlier period, it said.
“The increase in profit is due to the start of the SAFCO 4 expansion project in the second quarter of 2007, which has hiked sales by 52 percent, as well as a rise in the prices of core products,” SAFCO said. For the full-year, net profit rose 92 percent to a record SR2.21 billion, SAFCO said.
Earnings per share rose to SR11.04 for 2007 compared with SR5.76 in 2006.
Separately, a memorandum of understanding has been signed yesterday between SABIC and OSOS Petrochemicals (currently under formation).
Under the deal, SABIC will enter as a partner in the OSOS Petrochemicals project worth $1 billion at Yanbu industrial city.
According to this agreement, SABIC will complete in no more than 2 months the exploration and review all works, studies and agreements prior to updating the respective economic feasibility study.
SABIC will hold 35 percent in the joint venture.
