SABIC, a petrochemicals company, makes a profit in the third quarter but fails to meet market expectations

Saudi Basic Industries Corp. (SABIC), a major petrochemicals company in the world, reported a net profit of $1.5 million for the third-quarter, compared to a loss the previous year. This was due to higher revenues and core profits.

In a press release, the company reported that its net profit for three months ended September 30 was 1 billion riyals (266.27 millions dollars), compared to a loss last year of 2.87 billions riyals.

LSEG data shows that the third-quarter profits missed analysts' expectations by 1.6 billion riyals.

The net income for the quarter reported fell from 2.18 billion riyals to just 1 billion riyals ($266.27 millions).

In recent years, a combination of China's rapid capacity expansion and high energy prices in Europe has impacted petrochemical producers both in Europe and Asia. This has lowered margins and forced companies to consolidate.

The weakness of the sector is concerning for global oil companies, who are relying on the petrochemicals in order to maintain profits during the energy shift as the demand for transportation fuels declines.

SABIC, owned 70% by the oil giant Aramco in August, said its focus on long-term would be "strategic asset optimisation" as well as restructuring underperforming assets.

SABIC intends to sell a 20,6% minority stake in Aluminium Bahrain to Saudi mining company Ma'aden, for around $1 billion. This will help SABIC raise funds and expand their core chemicals business.

(source: Reuters)