Saudi Arabia’s biggest chemicals company warned of more uncertainty this year, signaling further pressure on its finances after reporting a surprise quarterly loss.
“Challenges remain ongoing, with rising supply levels at the forefront impacting product prices overall,” Saudi Basic Industries Corp. Chief Executive Officer Abdulrahman Al-Fageeh said. “Additionally, the continued geopolitical situation has sustained uncertainty, exposing the industry to further challenges.”
The comments come after the company reported a net loss of 1.89 billion riyals ($504 million) in the fourth quarter as prices of key products dropped. Full-year profit also fell short of analysts’ expectations, highlighting the concerns posed by overcapacity in the global industry and tepid demand. Sabic’s shares dropped as much as 3.1% in Saudi trading to the lowest level since 2020.
Chemicals giants around the world are trying to cope with elevated costs and compressed margins amid ongoing concerns over the global economy and the strength of demand. Forecast supply additions in China and the risk of headwinds from potential trade and tariff wars may make a recovery even tougher.
Last month, Dow Inc. said it’s planning to idle some chemicals capacity. LyondellBasell Industries NV noted it’s on watch for catalysts that may support more demand but remains cautious on potential headwinds. BASF SE recently warned it expects to miss full-year estimates when it reports later this week and flagged earnings momentum that “declined considerably” in the chemicals segment last quarter.
Sabic said global prices for some of its key petrochemicals, including polyethylene declined in the final stretch of 2024 due to pressure from excess supply and weak demand growth, according to the statement.
Analysts expect Sabic to continue to face oversupply in 2025. Still, operational efficiency, a strong balance sheet and backing from Saudi Arabia’s government are positives for the company, said Salih Yilmaz, senior analyst at Bloomberg Intelligence. Moody’s Investor Service recently upgraded Sabic’s credit rating, citing competitive costs and strong liquidity, among other factors.
Fageeh expects some stability in demand in the first quarter of this year, especially from transportation sector, industrial solutions, and electronics and electricals.
The company’s fourth-quarter revenue of 34.7 billion riyals was the lowest in a year and fell short of analysts’ estimates. The company forecast 2025 capital expenditure of $3.5 billion to $4 billion.
Saudi Aramco, the world’s biggest oil exporter, owns a majority of Sabic and is due to report earnings on March 4.
