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Saudi chemical group SABIC reports a Q1 loss of $323 Million

SABIC, the Saudi chemicals giant, reported on Sunday a net loss for the first quarter of 1,21 billion Saudi Riyals ($323m), citing an increase in operating costs as well as high feedstock prices.

This compares to a loss of 0.25 billion Riyals in the same time period last year.

Chemicals industry is struggling with low demand and high input cost, which has led to lower prices and squeezed profit margins.

SABIC announced in February that it would cut costs and look for new investment opportunities after reporting lower-than-expected fourth quarter results.

On Sunday, CEO Abdulrahman Al-Fageeh pointed out the challenges facing the global economy, including the slowdown of global GDP.

He said that the oversupply of production capacity in petrochemicals is still a problem.

SABIC said in a press release that the results were affected by an increase in operational expenses due to a one-time cost of 1.7 billion Saudi Riyals ($453.22 millions) relating to a strategic reorganization initiative.

Al-Fageeh stated that restructuring was ongoing but the last one had a larger scale and a greater impact. He added that he expects to complete the restructuring this year.

SABIC reported that the losses were also affected by a decline of 1.05 billion riyals in gross profit due to higher feedstock costs.

The company reported 34.59 billion Riyals in sales for the first quarter. This is a 5.8% rise from 32.69 riyals one year ago.

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More company coverage: (1 dollar = 3.7509 Riyals) (Reporting and editing by Conor Humphries; reporting by Pesha Magd)

(source: Reuters)