Saudi Basic Industries Corp (SABIC) 2010.SE will face further challenges this year due to the global trade war, the company’s chief executive said on Sunday, despite prices for some of its products stabilizing following a steep fall toward the end of 2018.
SABIC posted a 12.4 percent drop in fourth-quarter profit compared to the year earlier period, missing analyst forecasts. The company attributed the fall to lower average selling prices and a decrease in the share of results of associates.
“We’ve seen stabilization for some of the prices, still there are some challenges ahead of us,” Yousef al-Benyan told a news conference in the Saudi capital.
“We are part of the global economic system, we are always affected by challenges but we are able to adapt with these challenges in the best way.”
SABIC made a net profit of 3.24 billion riyals ($864 million) in the three months to Dec. 31, down from 3.7 billion riyals in the year-earlier period, the company said in a bourse statement.
That was lower than the average forecast of three analysts polled by Refinitiv, who expected SABIC to post a net profit of 4.92 billion riyals.
Shares of SABIC were trading 0.7 percent higher in late morning trade, recovering earlier losses.
The company’s results are closely tied to oil prices and global economic growth because its products – plastics, fertilisers and metals – are used extensively in construction, agriculture, industry and the manufacturing of consumer goods.
In 2018, U.S. West Texas Intermediate crude (WTI)futures CLc1 slumped nearly 25 percent, while Brent LCOc1 tumbled more than 19.5 percent.
SABIC’s biggest shareholder, the Public Investment Fund (PIF), is in talks to sell its majority stake to Saudi national oil giant Aramco IPO-ARMO.SE.
Wall Street ends up on shutdown deal
Benyan said he views Aramco’s move to buy shares in SABIC “positively”, but further details are between PIF and Aramco.
He said China remained SABIC’s main market and the company will seek to boost growth there, as well as raising its presence in Africa.
Discussions are also ongoing for growing SABIC’s business in North America, Benyan said.
He added the company will determine later if it needs to increase its stake in Switzerland’s Clariant (CLN.S) after the two companies decided to merge their high-performance materials businesses.