SABIC's loss-making subsidiaries turn to profit in Q1: CEO

SABIC's chief executive officer Yousef Al Benyan told Argaam that his company's loss-making subsidiaries, Hadeed and Ibn Rushd turned to profit in Q1 2018, posting roughly SAR 80 million and SAR 50 million respectively.

Hadeed, a steelmaker wholly owned by SABIC, underwent a restructuring after incurring SAR 1.4 billion net loss in 2017 alone. While long-time, loss-making Ibn Rushd turned to profitability after reducing its capital from SAR 8.51 billion to SAR 2 billion to write-off accumulated losses.

Al Benyan said a nine percent increase in steel prices had a positive impact on Hadeed’s performance in Q1. "We seek to enhance (Hadeed's) profitability and return on investment through a restructuring plan we applied as of the beginning of this year."

“Our vision is to place the company on an international competitive basis by improving productivity, production reliability and efficiencies."

"By the beginning of next year, we expect the restructuring scheme to be reflected positively on performance, given (anticipated) higher steel prices and demand," he added.

On Ibn Rushd, Al Benyan said the company posted its first quarterly net profit, and "we have no plans to exit Ibn Rushd. It produces important material for local market, and will be a catalyst for developing local content."

SABIC's sales rose 15 percent YoY in Q1 on an increase of output and selling prices by four and ten percent respectively. The company reported a net income of SAR 5.5 billion in Q1, five percent higher than the same period a year earlier.

"We are restructuring many of our activities under a program launched in 2015, whose partial results were reflected on some divisions and subsidiaries, including Kayan and Ibn Rushd."

On the financial impact of launching commercial production at Ibn Sina polyacetal (POM) manufacturing plant in January, Al Benyan said production was still at early stages.

He expected his company to face challenges following the mutual introduction of anti-dumping taxes in the US and China, "but we shall find solutions to avoid an impact on our customers in these countries," he said.

“We plan to get in touch with lawmakers and concerned parties to try to convince them that (a free) international trade is a necessity for developing (our) economies,” he said.