Sabic Fourth-Quarter Net Increases 11%, Missing Estimates

Saudi Basic Industries Corp., the world’s largest petrochemicals maker by market value, said fourth-quarter profit rose 11 percent as sales grew and it raised prices on some products.

Net income advanced to 5.83 billion riyals ($1.55 billion) from 5.24 billion riyals a year earlier, the Riyadh-based company known as Sabic said in a statement to the Saudi stock market today. That was less than the 6.4 billion-riyal average estimate of nine analysts compiled by Bloomberg News.

The gain in profit “was mainly because of higher prices in the fourth quarter,” Ahmed Shams El Din, Cairo-based director of equity research at EFG-Hermes Holding SAE, said in an e-mail. EFG-Hermes had forecast profit of 6.4 billion riyals.

Sabic declined 0.3 percent to 93.5 riyals as of 11:30 a.m. in Riyadh. The shares have advanced 3.9 percent this year, compared with a 3.6 percent increase in the benchmark Tadawul All Share Index.

The quarterly profit increase was Sabic’s first in 2012. Full-year net income for the maker of fertilizers, plastics and steel declined 16 percent to 24.7 billion riyals, highlighting the company’s struggle amid slowing economies in Europe and a resurgent U.S. chemical industry.

Slowing Economies

Europe’s economic woes also reduced demand for Sabic. The World Bank cut its 2013 global growth forecast this month to 2.4 percent from 3 percent. It projected a second year of contraction in the euro region.

Sabic said the decline in annual profit was because of “higher cost of sales and lower sales prices for certain products despite higher sales and production volumes and reduction in financial charges.”

Income from operations for the fourth quarter increased 7.5 percent from a year earlier to 10.2 billion riyals. It had earnings per share of 8.24 riyals in 2012, compared with 9.75 riyals the previous year.

Petrochemical and plastic products represented 75 percent of the kingdom’s non-oil exports in November, according to data from the Central Department of Statistics and Information in Riyadh. Asia was the top destination for non-oil exports at 40 percent, followed by the Middle East at 29 percent.

Subsidiaries also suffered from shutdowns. Saudi Kayan Petrochemical Co. fell the most in six months on Jan. 13 after quarterly results for the affiliate of Sabic missed estimates for the eighth consecutive time.

Saudi Kayan’s fourth-quarter loss widened to 195 million riyals from 191 million riyals in the year-earlier period. That missed estimates for losses of 50.3 million riyals at NCB Capital and 28 million riyals at Securities & Investment Co.

Saudi Arabian Fertilizer Co., known as Safco, is 43 percent owned by Sabic and Yanbu National Petrochemicals Co. is 51 percent owned. Both also reported a decline in quarterly earnings.