Q4 net profits declined by more than 12% at Saudi Arabia Basic Industries Corp (Sabic), despite a 17% year-on-year hike in 2018 profits.
According to Sabic’s interim financial results for last year, net profits after zakat and tax between October and December 2018 stood at $868.3m (SAR3.24bn), a 12.4% drop on the same period in 2017. Sabic reported a similar drop in total income, with the firm bringing in $1.06bn (SAR3.94bn) for the three months to 31 December, 2018 – a 12.2% drop on corresponding Q4 2017 figures.
In its statement to Saudi Arabian bourse Tadawul, Sabic attributed the drop in income to “lower average selling prices and decrease in share of results of associates and joint ventures”.
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Given that Sabic’s products are used in major global industries such as construction, the manufacture of consumer goods, and agriculture, its results are tied closely to global economic growth and oil prices.
Net profit for the 12 months ending 31 December fared better than quarterly figures, standing at $5.77bn (SAR21.54bn) – a marked 16.9% increase on 2017 figures of $4.9bn (SAR18.43bn). Similarly, total income for the year stood at $5.9bn (SAR22.05bn), a modest 2.6% increase on 2017, when income hit $5.8bn (SAR21.49bn).
“The increase in net income is attributable to higher average selling prices and increase in sales volumes,” Sabic said in its bourse filing. During this period, Sabic implemented a strategic restructuring initiative with an impact on total cost worth $294.8m (SAR1.1bn).
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The global petrochemical giant’s financials come after a busy end to 2018 for the firm. Early December saw it extend its joint venture with Japan Saudi Methanol Company, renewing its partnership with Saudi Methanol Company (Arrazi) for another 20 years.
Not long after it entered a contract with Saudi Contractors Authority to raise and enhance standards in the kingdom’s construction industry – the second largest non-oil economic sector in Saudi Arabia.
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