SABIC’s Q1 results impacted as product prices drop 15%, says Al Benyan

Saudi Basic Industries Corp’s (SABIC) Q1 2020 performance was hit by a 15% year-on-year (YoY) drop in average product prices, in addition to an over 25% slump in the company’s product prices, CEO Yousef Al Benyan told Argaam in an exclusive interview.

Some polymer products benefited from the coronavirus crisis, as returns from personal hygiene industries rose to 30% from 20%. Returns from flexible and rigid food and beverage packaging industries also grew by 10%.

Commenting on SABIC’s investments in Ibn Rushd, Al Benyan said the turnaround of Ibn Rushd has reached advanced stages.

The company has become ready to produce the basic materials required in the local market at lower prices when compared to their production cost.

Al Benyan expressed optimism for Ibn Rushd’s future financial results, which will reflect positively on the company after overcoming the coronavirus pandemic.

On the other hand, SABIC allocated asset impairment provisions of SAR 1.1 billion, including the SAR 713 million for the ULTEM™ polymers plant in Cartagena, Spain. The decision was partially attributed to the planned turnaround at SABIC’s plants worldwide.

The plant’s turnaround costs were based on accounting standards.

“These turnarounds will reflect positively on the geographical distribution of SABIC’s plants and on the Ultem production going forward,” Al Benyan added in the virtual earnings call held today.

He concluded that SABIC will not secure feedstock at preferential prices following Saudi Aramco’s acquisition of a 70% stake in the petrochemical producer, as feedstock prices are set by the Ministry of Energy.

SABIC swung to a net loss after Zakat and tax of SAR 950 million for the first quarter of 2020, compared to a net profit of SAR 3.4 billion in the same period last year.