Saudi Basic Industries Corp. fell to the lowest in more than three months after the world’s biggest petrochemicals maker reported a decline in profit.
The shares dropped 0.8 percent to 90.50 riyals, the lowest since Jan. 1, at the 3:30 p.m. close in Riyadh. The stock had a six-day losing streak, the longest since September, after the company’s units reported results that missed estimates. Saudi Basic, also known as Sabic, has the second-biggest weighting on the benchmark Tadawul All Share Index, which rose 0.5 percent.
Sabic, which said last week it plans to cut 1,050 jobs and close some plants in Europe, reported a 10 percent drop in first-quarter profit as production and sales at its units declined because of maintenance work. Sales fell 3.3 percent to 46.74 billion riyals ($12.5 billion).
“Second-quarter earnings depend on oil prices and performance of plants,” Chief Executive Officer Mohamed Al-Mady told reporters in Riyadh today. “The financial situation worldwide is fluctuating also, hence we can’t tell how we will perform during the rest of this year.”
Sabic’s units were affected by the slump in demand and lower prices for their products. Saudi Arabian Fertilizer Co. reported an 18 percent increase in quarterly earnings, missing analysts estimates. Saudi Kayan Petrochemical Co.’s loss widened to 155 million riyals from 71 million riyals, Yanbu National Petrochemical Co. posted a 7.4 percent decline in profit.
Sabic joined peers including Akzo Nobel NV and BASF SE in scaling down operations that are taking the brunt of a prolonged slump affecting construction and infrastructure as well as consumer spending on cars and appliances. The company in 2007 bought General Electric Co.’s plastics unit for $11.6 billion as part of a global expansion drive.
“The European market is facing structural changes that are likely to set a new course for future competitive challenges,” Sabic said last week. “Our industry continues to face slow growth.”
The company, based in Riyadh, also faces stiffer competition from a revived U.S. chemical and plastics industry that’s benefiting from shale gas supplies, as well as increased production among Asian peers seeking to satisfy their demand locally. The government of Saudi Arabia, the world’s biggest oil exporter, is Sabic’s biggest shareholder.
Fifteen analysts recommend investors buy Sabic shares, while two say hold, according to data compiled by Bloomberg.