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Saudi Arabian chemical firm SABIC’s Q3 net income dips 27%

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Saudi Basic Industries Corp (SABIC), a Saudi Arabian chemical manufacturer, has reported a 3 per cent revenue growth to SAR 43.7 billion (Saudi Riyals) in the third quarter (Q3) of FY21 ended on September 30, 2021, compared to the previous quarter. However, net income for the quarter fell 27 per cent to SAR 5.6 billion (Q3 FY20: SAR 7.6 billion).

“SABIC’s healthy financial performance during the third quarter of 2021 marked a continuation of our recovery from the impact of COVID-19, albeit at a lower level than our exceptionally strong performance during the second quarter.

We did, however, see a moderation in margins in the third quarter due mainly to rising feedstock costs, which offset the increase in average sales prices.” Yousef Al-Benyan, SABIC vice chairman and CEO, said in a press release.

Sales from the petrochemicals and specialities were up 4 per cent to SAR 37.8 million. In chemicals, mono ethylene glycol (MEG) prices increased in Q3 over the previous quarter due to higher feedstock prices with a rise in oil prices, tight supply coupled with lower production from coal based plants and relatively low levels of inventory in China, according to the company.

Moreover, methanol prices increased steady demand from traditional end industries, certain outages in Europe and lower production from a methanol-to-olefins (MTO) plants in China.

During the quarter, SABIC’s EBITDA slipped 18 per cent to SAR 11.2 billion (SAR 13.6 billion), while income from operations dropped 23 per cent to SAR 7.7 billion (SAR 10.0 billion).

“SABIC announced the start of commissioning activities and preparations for the initial start-up of the petrochemicals joint venture project in the US gulf coast (Gulf Coast Growth Ventures). This project supports SABIC’s global growth strategy, and its aim to diversify its feedstock sources and strengthen its petrochemical manufacturing presence in North America,” Al-Benyan said.

In its outlook for upcoming quarter, the diversified manufacturing firm said that it expects demand to be healthy and feedstock costs too remain elevated with higher oil prices. In addition, as the existing supply constraints continues to ease, SABIC expects to see a further moderation in margins during the Q4.

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