National Industrialization Co. tumbled to the lowest level in more than seven months after quarterly profit slumped 48 percent, dimming the outlook for petrochemicals stocks in the Arab world’s biggest economy.
Shares of the company known as NIC retreated 2.3 percent to 25.4 riyals, the lowest since Nov. 28, at the close in Riyadh. The stock was the biggest decliner on the Tadawul All Share Petrochemical Industries Index, which slid 0.8 percent. Saudi Basic Industries Corp., the world’s largest petrochemicals company, fell 0.5 percent to 94 riyals, the lowest since July 7.
NIC’s net income for the three months through June declined to 303 million riyals ($81 million) from 580 million riyals in the year-earlier period, the company said in a statement today. The results were affected by a drop in the titanium dioxide industry’s profit margins, triggered by a decrease in sales prices and an increase in production costs, NIC said.
The results “were below market expectations,” said Muhammad Faisal Potrik, senior research analyst at Riyad Capital. NIC “continues to be impacted by lower titanium dioxide prices and decline in sales, which is negatively affecting margins,” he said.
About 4.5 million NIC shares traded today, 3.1 times the three-month daily average, according to data compiled by Bloomberg.
Crude oil fell 0.7 percent in the second quarter after a rally of 5.9 percent in the first three months of 2013, data compiled by Bloomberg show. The Tadawul’s 14-member petrochemicals index gained 7.9 percent in the past 12 months, trailing an increase of 17 percent in the broader measure.
“The petrochemical segment has also experienced a volumetric decline in the quarter, contributing to lower profits,” Potrik said.
Shares of Yanbu National Petrochemicals Co., a unit of Sabic, fell 1.3 percent today, the third day of losses after its second-quarter profit missed estimates. Saudi Arabian Fertilizer Co., or Safco, dropped to the lowest level in almost two weeks after the Sabic affiliate also posted net income that fell short of estimates.
Six analysts recommend investors buy NIC shares, while five have a hold rating on the stock and one advises selling it, data compiled by Bloomberg show. NIC has dropped 17 percent the past year, the largest decline on the petrochemicals gauge in the period.