SABIC makes profit on operational business, global demand for petchems still low

Abdulrahman Al-Fageeh CEO of Saudi Basic Industries Corp. (SABIC)

Saudi Basic Industries Corp. (SABIC) recorded profits from operational business, although it incurred nearly SAR 2.9 billion losses in 2023 on the sale of Hadeed, CEO Abdulrahman Al-Fageeh said, expecting the company to turn a profit in the coming periods.

SABIC earned SAR 1.30 billion from continued core operations.

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Replying to a question by Argaam, Al-Fageeh said that demand for petrochemicals in global markets is still low, but some sectors witnessed slight growth. Demand in some key markets has not yet recovered or reached 2019 pre-COVID levels.

Demand for SABIC’s products exists and some of the company’s products are in demand worldwide. SABIC has no doubt about demand for its products, as these are specialized and unique, Al-Fageeh added, noting that old markets and clients are committed to their trade relations with SABIC.

Since its inception, SABIC grew exponentially and the company is keen to develop the human and technical capacities, innovations and technology.

SABIC will consider any acquisition or partnership opportunity that could add new value to the company and shareholders, the CEO said.

Meanwhile, he noted that interest rates and uncertainty slow investments, which weighs negatively on the industrial sector.

Despite rapid changes in global demand and the following capacity additions last year—which in turn squeeze global prices and economy—SABIC still sees lackluster demand in its target markets as uncertainty continued in the first quarter of 2024.

Commenting on higher raw materials prices, Al-Fageeh said naphtha prices rose by 2% on demand, and natural gas prices increased by 29% and 13% in Europe and the US, respectively, due to strong demand last winter.

The petrochemical and agricultural nutrients industries are an integral part of the global economy, the top executive said, indicating that these industries and their trends were directly affected, and they in turn impacted the global economy.

Demand varied quarter-on-quarter in the fourth quarter of 2023, as it improved in the agricultural, transportation, vehicles, electronics, electrical, consumer products, and healthcare sectors.

The CEO expects a moderate improvement in demand for the food, beverages, consumer and industrial goods, electronics and electrical sectors, noting that vehicles, healthcare and other sectors are still witnessing a noticeable decline in demand.

Chemicals are witnessing lackluster demand globally and an increase in supply for most products. However, SABIC recorded revenues of SAR 141 billion in 2023, compared to SAR 183 billion in 2022. This was due to a 21% fall in average selling prices from 2022 to 2023.

On the other hand, Salah Al-Hareky, Executive Vice President of Corporate Finance, said SABIC began to focus on improving its strategic portfolio, starting with the sale of its stake in Hadeed, and the assets were reevaluated at nearly $700 million.

He added that the initiative to improve the strategic business portfolio included re-evaluating assets in Europe, which affected earnings, noting that 2023 was full of challenges for all petrochemical companies.