Saudi Kayan swings to profit in Q1 despite weaker pricing

17 April 2014 15:52  [Source: ICIS news]

KARACHI (ICIS)--Saudi Kayan Petrochemical’s net profit for the first quarter of the year stood at Saudi riyal (SR) 9.94m ($2.65m) in the first quarter of 2014 compared to a net loss of SR154.87m in the same period last year, the producer said on thursday.

“The reasons for realising net profit during [the first-quarter] compared with same quarter last year was due to higher production and sales volume despite a decrease in average sales prices noting that there was a shutdown in the same quarter last year,” the company-  a unit of Saudi Basic Industries Corp (SABIC) - said in a bourse filing.

The producer’s gross profit in January to March 2014 grew more than threefold to SR257.05, while  operating profit remained at SR157.6m against a loss of SR10.73 m in the previous year.

“Saudi Kayan has reported another disappointing set of numbers,” said Riyadh-based investment firm NBP Capital.

“It seems that lower than expected operating rates and higher than expected non operating expenses led to deviation in earnings,” the brokerage house added.

NBP said Saudi Kayan’s plants operated at a 88% utilisation rate from January to March, compared to industry expectations of around 95%.

“On a year-on-year basis, earnings improved due to higher volumes as the company conducted a planned shutdown in 11 out of its 14 plants for 21-50 days in [the first quarter 2013],” it said.

“Despite the third consecutive quarter of net income [growth], we are concerned about  the slow earnings improvements of Saudi Kayan which indicates an operational issue. Moreover, the fluctuating naphtha prices also limit operating margin  expansion,” NBP added.

Saudi Kayan has an annual production capacity of over 4m tonnes/year of petrochemical and chemical products.

($1 = SR3.75)

By: Aamir Ashraf

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