Saudi Arabia’s biggest chemical company posted a third consecutive quarterly loss, missing estimates by analysts for a profit, as it shut down some assets amid a prolonged industry downturn.
Saudi Basic Industries Corp. reported a net loss of about 4.1 billion riyals ($1.1 billion), compared with a loss of 1.2 billion riyals in the prior period, according to a statement on Sunday. The consensus forecast among analysts was for a profit of 1.1 billion.
Shares fell as much as 1.9% at the open on Saudi Arabia’s main stock exchange.
Results were affected by impairment charges related to the closure of a cracker at its Teesside facility in the UK and on its investment in Clariant due to a decline in the company’s share price.
Market sentiment remained uncertain and the company witnessed oversupply and weak demand across most of its key chemicals segments, according to Sabic.
“As a result of excess production capacity, operating rates remain below the historical global average, leading to margin pressure due to oversupply,” Chief Executive Officer Abdulrahman Al-Fageeh said.
Sabic earlier this year announced a plan to restructure the company to cut costs, as softer demand has hit earnings and shrunk margins of major chemical companies around the world. Firms have been selling assets and shuttering projects in response to the challenges.
Dow Inc. reported its first quarterly loss in five years last month and said it would close three plants in Europe. LyondellBasell missed on second-quarter earnings and delayed construction on a project in Texas, while saying it remains “cautiously optimistic” on developments to address execess capacity in Europe and revitalize the industry in Europe. Its shares fell 8% on Friday after the results.
BASF SE is also selling a unit to focus on its core business while Shell Plc said recently that its chemicals business has been suffering for a while.
Analysts expect Sabic to face ongoing margin pressure and weak pricing due to persistent oversupply in key petrochemical products, though its diversified portfolio and fixed-feedstock cost structure are seen as supporting margins. Sabic is considering a public listing of its industrial gases unit as part of a broader operational review.
The Saudi company said it’s still reviewing its strategic businesses in Europe and has yet to make a final decision on a possible IPO for National Industrial Gases Co.
Sabic cuts 2025 capex guidance to $3 billion to $3.5 billion from as much as $4 billion previously. Second-quarter revenue beat analyst estimates.
The chemical giant’s shares have declined about 20% this year. The broader Saudi index has dropped by about half of that amount over the same time period.
Saudi Aramco, the world’s biggest oil exporter, owns a majority of Sabic and is due to report earnings on Aug. 5.
