Saudi SABIC Q2 net profit up 3.8%; H2 margins to stay under pressure
SINGAPORE (ICIS)–Saudi petrochemicals major SABIC posted a 3.8% year-on-year increase in second-quarter net profit, while it expects margins to remain under pressure in the second half of 2022.
Higher average selling prices and sales volumes were recorded in April-June 2022, but these were offset by increased feedstock costs and higher selling and distribution expenses, SABIC said in a filing to the Saudi bourse, Tadawul on 9 August.
|Saudi Riyals (SR) billion||Q2 2022||Q2 2021||% change||H1 2022||H1 2021||% change|
Second-quarter EBITDA (earnings before interest, tax, depreciation and amortization) margin fell to 24% from 32% in the same period of 2021, even as selling prices rose by 22% and sales volumes increased by 10% over the same period.
Margins are being weighed down by the “slowdown in global GDP growth, lockdowns in China, conflict in Europe and continued supply chain challenges”, SABIC said.
The global GDP growth rate is now estimated to be between 2.5% and 2.8%, down from a previous projection of between 3.2% and 3.6%, it said.
Q2 EARNINGS WEAKER VERSUS
At SABIC’s petrochemicals and specialties business, Q2 EBITDA slipped by 1% from the previous quarter to Saudi riyal (SR) 9.37bn ($2.5bn) despite a 4% increase in revenue to SR46.2bn.
Monoethylene glycol (MEG) and methanol prices both weakened over the period, but methyl tertiary butyl ether (MTBE) prices hit their highest since 2013 on the back of strengthening crude and gasoline prices.
For polyethylene (PE), second-quarter prices increased in the US and Europe, primarily driven by higher feedstock costs, but were relatively stable in other markets.
In China, PE demand weakened due to COVID-19 restrictions in the second quarter.
Polypropylene (PP) prices were also higher quarter on quarter due to higher feedstock cost.
Focus article by Nurluqman Suratman
($1 = SR3.75)
Thumbnail photo: SABIC headquarters in Riyadh, Saudi Arabia (Hassan Ammar/AP/Shutterstock)
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