Sabic reports huge rise in second quarter profits

Sabic reports a huge rise in second quarter profits

4:03 PM, 18th July 2011
Sabic reports a huge rise in second quarter profits
Al-Mady, Vice Chairman and CEO, SABIC.

  • Net profit up 61 per cent
  • Attributes success to increased volumes and prices
  • Looking for further acquisitions
  • Interested in investing in India
  • Kayan due online second half of this year

RIYADH, SAUDI ARABIA: Saudi Basic Industries Corp (SABIC) reported a huge increase in profit in the second quarter of 2011. Net income rose 61 per cent to SR 8.1 billion ($2.16 billion) over the same period of last year and was up 5 per cent on the first quarter of this year when net income reached SR 7.69 billion. The company beat consensus estimates of SR 7.1 billion for the quarter.  Gross operating profit in the second quarter was 39 per cent higher year-on-year at SR 16.49 billion while operating income was 45 per cent higher at SR 13.28 billion.

Net income in the first six months of the year reached SR 15.79 billion, 51 per cent up on the year-earlier period. Gross operating profit for the first six months reached SR 31.92 billion, a 33 per cent  rise on the corresponding period of 2010. Operating income in the first six months were SR 25.78 billion, compared with SR 18.84 billion in the year-earlier period. Earnings per share for the six months ended June 30, 2011 amounted to SR 5.26 compared to SR 3.48 for the same period in 2010, the company says.

Sabic attributes the steep rise in net income in the second quarter and the first six months to increased production and sales volumes and improvement in sales prices for most of the products. The rise in the second quarter result is due to increased sales volumes as well as improvement in prices for some of the products.

“Sabic is diversified along product and geographical lines with roughly 60 per cent feedstock exposure to lighter cost advantage feeds with ethane priced at 75 cents/million Btu; the remaining 40 per cent exposure centers on heavier feeds, including propane and butane priced at a 30 per cent discount to Japanese naphtha, making it comparable in production economics to US ethane based facilities,” said Hassan Ahmed, Partner and Head of Research, Alembic Global Advisors (New York).

Sabic’s CEO Mohamed Al Mady, said that maintaining profitability would be a tough challenge after the record profit in the latest quarter. The company is in a good position to grow its business and make acquisitions, when necessary, he said. “We are always on the lookout for important acquisitions and for organic growth,” said Al Mady.

Also India is a huge market and Sabic is looking at investment opportunities in India.  “If there are refineries attached to petrochemical plants we will be looking at that,” he said.

© Reuters

 

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