(Corrects currency conversion in second paragraph of Sabic earnings story that originally ran yesterday.)

July 18 (Bloomberg) -- Saudi Basic Industries Corp., the world’s largest petrochemical maker, said second-quarter profit fell 76 percent, missing analysts’ estimates, as the economic slump hurt prices and demand for plastics and fertilizers.

Net income declined to 1.81 billion riyals ($483 million) from 7.55 billion riyals a year earlier, Riyadh-based Sabic said today in a statement on the Saudi bourse Web site. The average estimate of four analysts surveyed by Bloomberg was 2 billion riyals.

“The pricing environment was better in the second quarter than in the first quarter 2009, but it was not enough to compensate for a decline in volumes in the same period,” Laurent-Patrick Gally, vice president of research at Shuaa Capital PSC, said in a phone interview today from Dubai.

Sabic, 70 percent owned by the Saudi government, has cut jobs and reduced output as the worst recession since World War II weakened demand for plastics used for everything from packaging to car bumpers. Sabic Innovative Plastics, the U.S. unit purchased from General Electric Co., plans to cut 1,000 jobs, or 9.5 percent of its workforce, by the end of this year.

Sabic, which released earnings after the market closed, rose 4.4 percent to 65.75 riyals in Riyadh. It advanced 22 percent in the year through July 15, giving the company a market value of 189 billion riyals. BASF SE, the world’s largest chemical provider, has gained 14 percent.

Shutting Plants

BASF, Dow Chemical Co. and other chemical makers have closed plants and revamped units to cope with falling orders brought on by the global credit crisis. BASF said last month it would shut a polystyrene plant, reducing its production of the chemical in Europe by 15 percent, as it tries to make a Styrenics unit more attractive to potential buyers.

The global slump has hurt Chief Executive Officer Mohamed al Mady’s returns from the $11.6 billon purchase of the GE plastics unit in 2007. The largest-ever acquisition by a Gulf- based company added a network of factories making resins and thermoplastic sheets used in cars shortly before General Motors Corp. and Chrysler LLC were pushed into bankruptcy.

Saudi Arabian Fertilizer Co., Sabic’s agriculture unit, posted its steepest decline in quarterly profit in seven years, falling 60 percent in the second quarter to 480 million riyals. The company’s average urea selling price dropped by 8 percent to $260 a ton in the second quarter from the first, EFG-Hermes said in a report. Fertilizer made up 19 percent of Sabic’s profit last year.

Sabic reported a surprise first-quarter loss of 974 million riyals, its first since 2001, after booking 1.18 billion riyals in goodwill writedowns attributed to Sabic Innovative Plastics. First-half net slumped to 830 million riyals, or 0.28 fils a share, from 14.5 billion riyals, or 4.82 riyals a share.

To contact the reporter on this story: Glen Carey in Riyadh at gcarey8@bloomberg.netFiona MacDonald in Kuwait at fmacdonald4@bloomberg.net

Last Updated: July 19, 2009 04:27 EDT