BCI faces mild price pressures in Q1, plans to mitigate impact

Ala’ Al-Shaikh, CEO of Basic Chemical Industries 

Basic Chemical Industries Co. (BCI) is to face slight price pressures in the first quarter of 2025, BCI CEO Alaa Al-Shaikh expects.

However, Al-Shaikh noted that BCI is working on expanding into new markets and increasing export capacity for certain products in the first half of the year to mitigate the impact on profitability.

In an interview with Argaam, Al-Shaikh stated that Q4 2024 saw a notable revenue improvement of approximately SAR 5 million compared to the same period in 2023, contributing to a 5% increase in profit margin.

He highlighted that financing costs decreased by SAR 3.35 million after replacing a commercial loan with a grant from the Saudi Industrial Development Fund (SIDF). However, general and administrative expenses rose by SAR 1.1 million.

Regarding sector performance, Al-Shaikh explained that polyurethane segment revenues declined by SAR 5.1 million due to an 11% drop in sales volumes. Meanwhile, adhesive segment sales increased by 4%, despite a 3% decline in average selling price, resulting in an overall sales increase of SAR 650,000.

Net profit decreased by approximately SAR 8 million compared to Q4 2023, primarily due to a 5%-6% rise in raw material costs in the adhesives and polyurethane segments.

The revenue increase was driven by a 16% rise in sales volumes, along with a 6% increase in average selling prices in the basic chemicals segment. Additionally, revenues in the industrial chemicals segment grew by 20% due to improved pricing, despite a 12% decline in polyurethane sales.

On the impact of rising diesel prices, Al-Shaikh noted that the increase, which took effect in early 2025, will raise operating costs, including raw material expenses, fuel consumption, and distribution costs.

To address this, BCI has developed a plan to adjust sales and delivery prices while also exploring alternative strategies to reduce distribution costs.

Regarding the expansion project at the Jubail plant, the CEO stated that work has already begun, with completion and production expected within 20 months. This expansion will boost the plant’s production capacity by 40%.

He also emphasized that replacing the long-term commercial loan with a grant from SIDF helped reduce financing costs by approximately SAR 14 million in 2024 compared to the previous year, strengthening the company’s expansion capabilities.

Finally, Al-Shaikh highlighted that the company’s low debt-to-asset ratio supports its ability to fund future projects, including the Jubail plant expansion.