21 April 2009 09:42 [Source: ICIS news]
Correction: In the ICIS news story headlined “SABIC swings to Q1 net loss on one-off charge, price falls” dated 21 April 2009, please read in the 7th paragraph … Gross income … instead of … Sales …. A corrected story follows.
(adds details, analyst’s comments)
By Bohan Loh
SINGAPORE (ICIS news)--Petrochemical giant Saudi Basic Industries Co (SABIC) reported a March quarter net loss of Saudi Riyals (SR)974m ($260m), its first in seven years due to sharp falls in product prices and a huge one-off charge.
This was a reversal of SR6.92bn net profit recorded in the same three-month period in 2008.
The first quarter numbers came as a surprise to analysts who were expecting SABIC to post SR1.2bn in profit, said Laurent Gally, an analyst at Dubai-based investment bank Shuaa Capital.
SABIC incurred a SR1.18bn goodwill impairment charge during the period related to its American operations SABIC Innovation Plastics that was acquired in 2007, he said.
Taking out the one-off charge, the company’s net profit would have been SR207m for the period, which represented a steep decline from levels recorded a year earlier.
“The loss is also due to a lack of underlying improvements in the company’s core business as compared to the fourth quarter of 2008,” said Gally.
Gross income for the quarter plunged 74% to SR3.62bn from SR13.8bn in the previous corresponding period, SABIC said.
Earnings had been strained by the price declines in most petrochemical products and metals in the first three months of the year, SABIC said in a filing to the Saudi Stock Exchange (Tawadul).
The company added it had been particularly hard hit by the slump in the automotives and construction sectors, with limited access to credits further accelerating the decline in petrochemical prices.
Despite SABIC’s dismal earnings, Shuaa Capital’s Gally is optimistic that the company will swing back into profit in the current quarter.
“We expect a subsequent improvement in the company’s second-quarter results as chemical prices have continuously been rebounding throughout the first quarter,” Gally said.
($1 = SR3.75)
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