Saudi Petrochemical Giant SABIC Reports Q3 Net Loss
Saudi Arabia's petrochemical giant, SABIC, reported a Q3 net loss of 2.88 billion riyals, largely attributed to an impairment charge related to the fair value assessment of Saudi Iron and Steel Company (Hadeed). This move followed Saudi Arabia's sovereign wealth fund's acquisition of SABIC's stake in Hadeed. SABIC's Q3 revenues fell to 35.98 billion riyals from 43.32 billion a year earlier, with a 6% increase quarter-on-quarter.
Karobar
Dubai: Saudi Arabia's global petrochemical leader, Saudi Basic Industries Corp (SABIC), recently announced a substantial 17% decline in third-quarter revenue and reported a significant net loss for the period.
In an official filing, SABIC disclosed a net loss of 2.88 billion riyals ($768 million) for the three months ending on September 30. This marked a stark contrast to the 1.84 billion riyals in profit recorded during the same period the previous year.
The primary driver of this loss was the recognition of an impairment charge totaling 2.93 billion riyals related to the fair value assessment of Saudi Iron and Steel Company (Hadeed). This evaluation came in the wake of Saudi Arabia's sovereign wealth fund's acquisition of SABIC's entire stake in Hadeed.
The divestment of Hadeed, a strategic decision made in September, allowed the Saudi petrochemical giant to refocus on its core business and optimize its strategic portfolio.
SABIC's revenue for the quarter fell to 35.98 billion riyals, down from 43.32 billion in the previous year. However, it witnessed a nearly 6% increase in revenue on a quarter-on-quarter basis.
The global petrochemical market continues to grapple with challenges such as weak global demand and an oversupply of most products, as reported by SABIC. The company experienced a 5% decline in its average selling price for the quarter, although prices for agri-nutrient products showed a notable 11% increase.
SABIC emphasized its commitment to disciplined capital expenditure management, estimating an expenditure of $3.5 billion to $3.8 billion for the year 2023.
Notably, chemical manufacturers had previously raised concerns about the potential impact of a slower-than-expected economic recovery in China following the pandemic and reduced demand in Europe during the latter half of the year.
In terms of stock performance, SABIC shares have experienced a decline of nearly 15% over the course of this year.
The significant loss reported by SABIC, a major player in the global petrochemical industry, raises concerns not only in the international business community but also in Pakistan. This development is particularly relevant given Pakistan's reliance on petrochemical products and its potential impact on the Pakistan economy. It underscores the importance of keeping a close watch on developments in the global petrochemical sector, especially for businesses and policymakers in Pakistan.
