Sabic Q1 2023 profit drops 90% to $176m on lower sales

Saudi Basic Industries Corporation (Sabic), one of the largest global petrochemical companies, saw its net profit for the first quarter of 2023 tumble 90 percent to SAR660 million ($175.98 million) from SAR6.47 billion a year earlier.

Revenue fell 25 percent year-on-year to SAR39.69 billion in Q1 2023. Average sales prices slipped 22 percent, while sales volumes decreased by three percent year-over-year.

Sabic warned that “margins will remain under pressure in the second quarter.”

“We are closely monitoring the changes and the recovery of the global market demand,” said Sabic CEO Abdulrahman Al Fageeh in a statement.

New capacities in Q1 2023 are adding more pressure on global prices, while there is limited relief on variable cost, he added.

The Saudi-listed firm remains determined to deliver on growth, innovation and sustainability despite market uncertainties, Al-Fageeh said, indicating the “Shareek” program will play a key role in growth plans.

Shareek, the Arabic word for partner, aims to enhance partnerships with the private sector and increase the contributions of national companies to the sustainability of the national economy.

“High inflation and interest rates continue to add to the uncertainty of global demand growth. We expect margins to remain under pressure in Q2 2023,” Sabic said, expecting global economic growth to average 2.1 percent this year.

The company’s net cash position stood at SAR17 billion by March 31, 2023, a 22 percent increase from SAR13.93 billion on December 31, 2022.

In March, Sabic announced the startup of commercial operations at a polycarbonate plant in China, a 50-50 joint venture with Sinopec, with an annual capacity of 260,000 tonnes.