|01-18-2015, 01:18 PM||#1|
SABIC Q4 profit slumps 29% on lower oil prices
Saudi Basic Industries Corporation (SABIC), the Middle East’s largest listed company and one of the world’s largest petrochemical companies, reported on Sunday fourth-quarter net income fell 29%, sharply missing estimates.
Saudi Arabia’s largest listed company posted earnings of SAR4.36 billion ($1.16 billion) in the three months to December 31, down from SAR6.16 billion in the corresponding period in 2013 and from SAR6.18 billion in the third quarter, the company said in a bourse statement.
Analysts by Reuters had forecasted fourth-quarter profit of SAR5.50 billion.
SABIC said the plunge in profits was a result of lower average prices for its products, although lower feedstock prices partly balanced out that decline.
Petrochemical producers’ profits took a heavy hit from the decline in global oil prices, which fell more than a half since June as prices of the products they sell declined.
SABIC’s earnings started to feel the pain from lower oil prices since the third quarter though as its customers started to pay lower prices for its final products since the start of oil’s fall in July.
SABIC’s earnings are highly correlated with global economic growth because of its non-oil product range, which includes fertilizers, metals and plastics, which are used heavily in construction, consumer goods manufacturing and agriculture.
Most developed economies and part of emerging economies started to slow down in 2014 and the positive effects of lower oil prices are yet to begin helping global consumer spending to propel economic growth higher.
SABIC’s shares are expected to suffer some pressure when the Saudi stock market opens on Sunday, but higher oil prices should soften the blow as most equities in the region were higher.
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