2025-11-03
Saudi Chemical Giant Misses on Profit As Downturn Persists
Saudi Arabia’s biggest chemical company reported lower-than-expected profit as a global industry downturn persisted and pressured selling prices, margins and utilisation rates.
Saudi Basic Industries Corp posted third-quarter net income of 440mn riyals ($117mn), according to a statement on Sunday. While the company returned to profit after a string of quarterly losses, the figures trailed the consensus forecast of 729mn by analysts surveyed by Bloomberg.
Revenue also trailed as average selling prices dipped. Sales volumes were mostly flat but are expected to increase slightly in the current quarter, the company said during a press conference.
Cost reductions are also set to continue under its restructuring programme, which has already delivered $300mn in value so far this year, it said. Sabic is still evaluating its portfolio of assets as part of that programme.
Sabic shares fell as much as 1.2% in Riyadh.
The quarter reflected a “moderately improving macroeconomic landscape,” Chief Executive Officer Abdulrahman al-Fageeh said in the statement. “Yet, industry overcapacity persisted in the petrochemical industry, continuing to squeeze margins and depress utilisation rates.” R
Softer demand has hit earnings and shrunk margins of major chemical firms around the world over the past few quarters, forcing some to sell assets and shutter projects.
LyondellBasell Industries NV announced Friday it will idle production capacity at sites in Germany and the US from November, while Shell Plc also said last week that there’s little end in sight to the chemicals downturn.
German giant BASF SE offered some positive signals, saying growing demand in China is helping offset weakness elsewhere. The company’s earnings before interest, tax, depreciation, amortisation and special items declined 4.8%, while Dow Inc narrowed its loss in the third quarter.
Sabic maintained its 2025 capital expenditure forecast of $3bn to $3.5bn and said it’s confident in its ability to navigate further volatility.
Analysts expect Sabic to face ongoing pressure from an oversupply in key petrochemical products and weak pricing, though it’s diversified portfolio and fixed feedstock costs are likely to be supportive.
Fitch recently affirmed Sabic’s credit rating at A+ — the fifth highest — and highlighted the company’s cost leadership, geographic diversification and “very conservative” financial profile.
The chemical giant’s shares have declined more than 9% this year, steeper than the broader Saudi index’s 3% fall.
Saudi Aramco, the world’s biggest oil exporter, owns a majority of Sabic and is due to report earnings on Tuesday.
Saudi Basic Industries Corp posted third-quarter net income of 440mn riyals ($117mn), according to a statement on Sunday. While the company returned to profit after a string of quarterly losses, the figures trailed the consensus forecast of 729mn by analysts surveyed by Bloomberg.
Revenue also trailed as average selling prices dipped. Sales volumes were mostly flat but are expected to increase slightly in the current quarter, the company said during a press conference.
Cost reductions are also set to continue under its restructuring programme, which has already delivered $300mn in value so far this year, it said. Sabic is still evaluating its portfolio of assets as part of that programme.
Sabic shares fell as much as 1.2% in Riyadh.
The quarter reflected a “moderately improving macroeconomic landscape,” Chief Executive Officer Abdulrahman al-Fageeh said in the statement. “Yet, industry overcapacity persisted in the petrochemical industry, continuing to squeeze margins and depress utilisation rates.” R
Softer demand has hit earnings and shrunk margins of major chemical firms around the world over the past few quarters, forcing some to sell assets and shutter projects.
LyondellBasell Industries NV announced Friday it will idle production capacity at sites in Germany and the US from November, while Shell Plc also said last week that there’s little end in sight to the chemicals downturn.
German giant BASF SE offered some positive signals, saying growing demand in China is helping offset weakness elsewhere. The company’s earnings before interest, tax, depreciation, amortisation and special items declined 4.8%, while Dow Inc narrowed its loss in the third quarter.
Sabic maintained its 2025 capital expenditure forecast of $3bn to $3.5bn and said it’s confident in its ability to navigate further volatility.
Analysts expect Sabic to face ongoing pressure from an oversupply in key petrochemical products and weak pricing, though it’s diversified portfolio and fixed feedstock costs are likely to be supportive.
Fitch recently affirmed Sabic’s credit rating at A+ — the fifth highest — and highlighted the company’s cost leadership, geographic diversification and “very conservative” financial profile.
The chemical giant’s shares have declined more than 9% this year, steeper than the broader Saudi index’s 3% fall.
Saudi Aramco, the world’s biggest oil exporter, owns a majority of Sabic and is due to report earnings on Tuesday.
Source: GULF TIMES