Healthy demand boosts product prices in Q4 2020, sales likely to rise 2-5% in 2021: SABIC

SABIC Headquarter

Saudi Basic Industries Corp. (SABIC) said product prices rose in the fourth quarter of 2020 driven by healthy demand and tighter supply-demand balance for some of the key products, as a result of outages and rising oil prices, which in turn contributed to improved profit margins.

Sales volumes in 2020 were 1% higher overall, with Q4 witnessing average sales prices increase by 13% compared to Q3 2020, the corporation said in Q4 2020 earnings report.

“In most parts of the world, we expect economic activity to continue improving as witnessed during the second half of 2020, and estimate the global GDP growth rate to increase between 4.5% and 5% in 2021,” the company said.

SABIC also expects sales volumes to be approximate 2-5% higher compared to the previous year.

The company will remain focused on optimal capital use during the current year, with capital expenditures expected to remain stable compared to the previous year.

“The fourth quarter benefited from sustained economic recovery, which translated into a healthier demand for our products. Our global business model and the strength of our global supply chain continue to demonstrate their resilience and flexibility, positioning us well for long-term growth,” said Yousef Abdullah Al-Benyan, vice chairman and chief executive officer of SABIC.

“Distributing competitive dividends to our shareholders continues to be paramount and this is supported by our firm commitment to maintaining capital discipline, as well as our ability to uphold a strong balance sheet and credit rating,” he added.

SABIC reported a net profit of SAR 2.22 billion for Q4 2020 from a loss of SAR 890 million in the same period a year earlier, according to data compiled by Argaam.