Saudi Kayan’s Q1 2022 profit margins hit by 11% drop in selling prices, higher feedstock costs: Chairman

Saudi Kayan Petrochemical Co.’s headquarters

Saudi Kayan Petrochemical Co.’s Q1 2022 profit margins, particularly of polycarbonates and glycol ethylene, were hit by an 11% decline in product average selling prices, on the back of subdued demand and higher production in some global markets, Chairman Ahmed Al-Shaikh told Argaam.

Sales volumes in Q1 2022 edged down 1% quarter-on-quarter, but jumped 18% year-on-year.

Al-Shaikh explained that feedstock cost is one of the biggest challenges to the company, as it is directly linked to energy prices, which weigh on Saudi Kayan. The company’s production is based on olefins and 80% of its products depend on butane, which hit fresh records in the last two quarters.

“Maintaining profit, aggrandizing shareholders’ equity and return on assets are Saudi Kayan’s top priorities,” he affirmed. The company also seeks to maintain high sales and market its higher-margin products in global markets. Meanwhile, Saudi Kayan aims to continue its optimal deployment of cash, reduce costs, loans and other financial burdens.

“It is currently difficult to foresee profit this year, on the back of continued fluctuations in global markets, and volatility in product prices, which impact the company’s performance and profitability,” Al-Shaikh concluded.