July 20 (Bloomberg) -- Saudi Basic Industries Corp. reported a 7 percent increase in second-quarter profit, topping analysts’ estimates, as sales at the world’s biggest petrochemicals maker increased. The shares dropped.
Net income rose to 6.46 billion riyals ($1.72 billion) from 6.04 billion riyals a year earlier, the Riyadh-based company known as Sabic said in a statement. The average estimate of nine analysts was for a profit of 6.40 billion riyals, according to data compiled by Bloomberg.
Sabic, which in 2007 bought General Electric Co.’s plastics unit for $11.6 billion, said in April it plans to expand in China and the U.S. as it is more difficult for the company to grow in the kingdom due to a shortage of gas. The company’s affiliates, Saudi Arabian Fertilizer Co. and Yanbu Petrochemical Co., posted quarterly profits that missed analysts estimates as cost of sales rose and product prices fell.
“The results are more or less in line with the expectations and there are no more surprises expected from the company so people are cashing out,” Yazan Abdeen, a fund manager at Jeddah, Saudi Arabia-based Sedco Capital, said of the share decline. The Saudi stock market is shut next week for Muslim Eid holidays and that could be contributing to lower trading volumes, he said.
The stock fell for a third day, losing as much as 0.9 percent in Riyadh. It has gained 3.4 percent this year compared with a 14 percent advance for the benchmark Tadawul All Share Index.
Second-quarter profit was driven by higher sales, prices of certain products, income from affiliates as well as lower financial charges, the company said in the statement. Sales climbed to 48 billion riyals from 45 billion riyals, Chief Financial Officer Mutlaq Al-Morished said.
“The outlook for demand in the next three years is good and there is room for improvement in petrochemicals prices,” Chief Executive Officer Mohammed Al-Mady told reporters in Riyadh today. “Sabic’s future plans focus on enhancing the market that consumes our products.”
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