SABIC Q1 profit hit by global downturn

22 Apr '09

3 min read

The Saudi Basic Industries Corporation (SABIC) reports preliminary consolidated financial results for the quarter ended March 31, 2009.

The net loss for the quarter ended March 31, 2009 was SR 0.974 billion (USD0.26 billion), compared to net income of SR 6.924 billion (USD1.846 billion) in the same period of 2008. The net loss for the quarter ended March 31, 2009 is after a 'non-cash' charge related to the impairment of goodwill amounting to SR 1.181 billion (USD0.315 billion). The net income before the 'non-cash' charge related to impairment of goodwill was SR 0.207 billion (USD0.055 billion). The 'non-cash' impairment charge does not have any impact on the cash flows.

The continued decline in prices for most petrochemical products and metals led to a decline in the profitability during the first quarter of 2009 compared to the same period last year.

The income from operations for the quarter ended March 31, 2009 was SR 0.380 billion (USD0.101 billion) compared to SR 10.891 billion (USD2.904 billion) in same period of 2008. The loss per share for the quarter ended March 31, 2009 was SR 0.33(USD 0.088) compared to earnings per share of SR 2.31(USD0.616) for the same period in 2008.

Mohamed Al-Mady, SABIC Vice Chairman and CEO, said: "The financial and economic crisis that hit the world's major economies, and the credit crunch have led to difficulties for customers accessing credit facilities from banks and financial institutions.

This has contributed to the decline in demand for petrochemical products and metals, in particular engineering plastics, which have been impacted by the recession in the automotive, construction and electronic industries. These developments accelerated the pace of decline in the prices of petrochemical products and metals, adversely impacting the performance of global companies, including SABIC.

“In spite of the repercussions of the global economic crisis, which negatively affected the performance of global companies and the petrochemical industry, resulting in bankruptcies and significant losses, closure of a large number of plants and staff demobilization, SABIC has maintained the same operational levels.

SABIC's total production during the first quarter of 2009 reached 14.17 million tons, an increase of 0.39 percent, while quantities sold during the quarter were 11.53 million tons, an increase of 5 percent over the same period last year. This has significantly contributed to mitigate the effects of the current economic crisis on SABIC.”

Al-Mady added that SABIC, with its healthy financial position, its ability to generate strong cash flows, continued efforts to reduce costs, increased production capacities through current expansions in YANSAB, SHARQ and SAUDI KAYAN, and future expansion plans, will have a positive impact on its performance and financial results during the coming period, and will further strengthen its competitive position amongst the lowest cost producers globally.

Saudi Basic Industries Corporation

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