Profit at Saudi Basic Industries Corp. declined less than analyst estimates as the Middle East’s biggest petrochemicals company seeks ways to weather swings in oil prices.
Sabic’s second-quarter net income dropped 4.5 percent to 6.17 billion riyals ($1.65 billion) from 6.46 billion riyals a year earlier, the Riyadh-based company said in a statement to the Saudi bourse. The company’s profit is 25 percent higher than the 4.95 billion riyal mean estimate of nine analysts compiled by Bloomberg. It will pay a dividend of 2.5 riyals a share for the first half.
“Given the volatility in oil prices, we are looking at ways to optimize our feedstock production,” acting Chief Executive Officer Yousef Al Benyan said in a news conference in Riyadh.
Profit declined due to lower-than-average sales prices even after Sabic reduced its cost of production, the company said in the statement. Saudi Arabia is OPEC’s biggest oil producer, and the Arab nation is home to 16 percent of the world’s proven oil reserves. Brent crude, a pricing benchmark for about half the world’s oil, declined 49 percent in the last 12 months. The company’s second-quarter sales fell 13 percent to 42 billion riyals.
Sabic, which won’t be directly involved in Saudi Arabia’s shale production and has no plans to invest in Iran, is considering opportunities in U.S. shale gas production, Al Benyan said. It signed a shale gas production deal to export the product from the U.S. to the U.K. and other countries, he said.
Sabic’s outlook on China’s economy is positive, he said. China was Saudi Arabia’s biggest trading partner last year, according to data compiled by Bloomberg. The company’s shares rose 2 percent to 100.25 riyals as of 11:42 a.m. in Riyadh, bringing its increase this year to 20 percent. That compares with a 12 percent gain in the same period for the 170-member Tadawul All Share Index.