BCI anticipates stable prices in Q4: CEO

Ala’ Al-Shaikh, CEO of Basic Chemical Industries 

Basic Chemical Industries Co. (BCI) expects price stability to continue in Q4 2024, with a minor increase in shipping cost, particularly for overseas shipping of some raw materials, CEO Ala’ Al-Shaikh told Argaam in an interview.

Al-Shaikh explained that BCI’s affiliate Chemical Marketing and Distribution Co. (CMDC) achieved an increase in profit margins by 52% year-on-year (YoY), mainly due to the decrease in financing costs by SAR 4.4 million during Q3 2024 compared to Q3 2023.

Profit margins rose on the back of a 19% increase in sales volume and a 16% decline in average selling prices, coupled with a 20% surge in shipping and distribution costs.  

Meanwhile, selling and marketing expenses grew by 36%, while administrative expenses jumped 204% due to provisions booked for depreciation of some assets within the rehabilitation project of the company’s industrial complex in Dammam.

The polyurethane facility saw an increase in sales and a decrease in selling prices along with higher provisions, Zakat and tax, which weighed down profits by 34%.

He added that the company reported higher industrial adhesives sales and lower profit margins with an increase in provisions for Zakat and tax. Thus, profits fell 30% YoY in Q3 2024.

Additionally, BCI’s CEO stated that the segments’ performance varied as the basic chemicals unit posted a decline in sales volume by 4%, offset by an 11% increase in prices, while industrial chemicals sales volume fell 30%, pulling the unit down by 16%.

Furthermore, the toll manufacturing segment’s volume grew by 3%, with a 29% increase in prices.

The water treatment unit saw a decline in sales volumes by 13%, with an increase in their average prices by 23% compared to the same quarter in 2023.

He further indicated that BCI was not affected by any seasonal factors during the third quarter, while on an annual basis, performance is historically affected by Ramadan and holidays.

Regarding developments in Jubail plant project, after the company announced its intention to expand the project, Al-Shaikh said that Jubail plant had a positive impact during the third quarter of 2024. The operating rate during the period reached 99% of its production capacity, and this was reflected in the positive operating income of the plant against a loss during the first half of the year.

He pointed out that this performance reinforces the strategic direction of expanding the plant in its second phase to raise its production capacity by 40% to 70,000 tons of chlorine per year. The plant’s investment rate ranges between SAR 80 million and SAR 90 million.

He also said that the factory is in the final stages of studying and evaluating the offers and will a decision be made and disclosed during the last quarter of this year.

According to data compiled by Argaam, BCI posted a net profit of SAR 4.7 million in the first nine months of 2024, versus a loss of SAR 8 million in 9M 2023 after deducting minority interest. Q3 2024 profit stood at SAR 2.3 million.