Sabic Sees Chemicals Glut Hit Profit as Aramco Buyout Looms - Bloomberg

Sabic Sees Chemicals Glut Hit Profit as Aramco Buyout Looms - Bloomberg:

Saudi Basic Industries Inc. expects earnings to come under further pressure this year from sluggish economic growth and an oversupply of petrochemicals. The shares fell. 


The Middle East’s biggest chemicals maker reported its first quarterly loss in a decade last quarter due to lower sales prices and writedowns at a joint venture. The same factors that squeezed prices and profit margins last year are likely to persist in 2020, the state-run company said Wednesday.

“We see there is a slowdown in growth globally, specifically in China and Europe,” Chief Executive Officer Yousef Al Benyan told reporters in Riyadh. “These are very important regions that are going to impact the overall demand of our chemicals industry.” Additional production capacity in the U.S. and China “has really put pressure on margins,” he said.

Sabic is an important part of Crown Prince Mohammed bin Salman’s ambition to overhaul the kingdom’s economy by developing new industries and manufacturing. Saudi Aramco is preparing to buy the sovereign wealth fund’s majority stake in Sabic as the oil producer seeks to become a global chemicals powerhouse.