Total production quantities up by 2% during 2008, SABIC
SABIC reports Preliminary consolidated financial results for the period ending December 31, 2008 and distribution of dividends at SAR 1.25 per share for 2Q08.
• Net profits in the fourth quarter of 2008 amount to SAR 311 million, compared with SAR 6.87 billion in the fourth quarter of 2007, a decline of 95% and SAR 7.24 billion in the previous quarter, a decrease of 96%.
• The gross profit in the fourth quarter of 2008 was SAR 3.51 billion compared to SAR 13.35 billion for the fourth quarter of 2007, a decrease of 74%.
• The operating profit in the fourth quarter of 2008 was SAR 1.61 billion compared to SAR 11.11 billion for the fourth quarter of 2007, a decrease of 86%.
• The Net profit for the twelve month period ended on December 31, 2008 was SAR 22 billion, compared to SAR 27 billion for the same period in 2007, a decrease of 19%.
• Earnings per share during the twelve months ended on December 31, 2008 reached SAR 7.34 compared with SAR 9 for the same period in 2007 (As at the end of March 2008 the company's capital was increased from SAR 25 billion to SAR 30 billion, by granting one bonus share for every five shares).
• The gross profit for the twelve month period ended December 31, 2008 was SAR 48.1 billion, compared with SAR 47.43 billion for the same period in 2007.
• The operating profit for the twelve month period ended December 31, 2008 was SAR 37.27 billion, compared to SAR 41 billion for the same period in 2007, a decrease of 9%.
• The total production quantities during 2008 rose by 2% while the quantities sold have decreased by 1% compared with the previous year.
Generally, the sharp decline in the results of the fourth quarter of 2008 can be attributed to the decline in demand for petrochemical products and metals because of the economic recession that has hit the world's major economies, as well as the credit crunch that led to difficulties for consumers in obtaining the necessary financial facilities from banks and financial institutions.
This led to an acceleration in the pace of declining petrochemical product prices. The decline in demand for petrochemical products, particularly specialty plastics, arising from the crisis afflicting the global automotive industry and building and construction sectors, has had a strong impact on the performance of SABIC affiliates outside Saudi Arabia. This same decline has been felt by similar companies operating in the same industry. These affiliates are restructuring their businesses to improve performance through a reduction in costs, but in such a manner that does not affect their major activities.
Of course, the combination of these factors has negatively affected the performance and results of petrochemical businesses and the industry all over the world, resulting in bankruptcy for some companies and other companies incurring losses, which have in turn caused the closure of many plants and demobilization of large groups of employees. SABIC's investment in the past few years will contribute to boosting current production capacities, therefore having a positive impact on the company's performance and financial results in future years.