Page 9 - MEOG Week 05

MEOG PerFormanCe MEOG
SABIC posts rare loss for Q4 2019
saUdI arabIa
SAUDI Basic Industries Corp (SABIC) 2010.SE, the world’s fourth-biggest petrochemicals rm, posted a net loss of 720 million riyals ($191.94 million) a er tax, in the fourth quarter due to low selling prices and having to make a large emergency provision.
SABIC’s loss compared with a pro t of 3.22 billion riyals during the same quarter a year earlier, the company said in a bourse ling on Wednesday. e loss was also due to a 2.8 bil- lion impairment provision at its a liate Arabian Industrial Fibers Co (Ibn Rushd), it said.
Ibn Rushd’s complex in Yanbu, on Saudi Ara- bia’s Red Sea coast, produces aromatics, puri ed terephthalic acid (PTA) which is used in making polyester, and polyester staples.
Saudi Basic Industries Inc. expects earnings to come under further pressure this year from sluggish economic growth and an oversupply of petrochemicals. e Middle East’s biggest chemicals maker reported its rst quarterly loss in a decade last quarter due to lower sales prices and writedowns at a joint venture. e same fac- tors that squeezed prices and pro t margins last year are likely to persist in 2020, the state-run company said last Wednesday.
“We see there is a slowdown in growth glob- ally, specifically in China and Europe,” Chief Executive O cer Yousef Al Benyan told report- ers in Riyadh. “ ese are very important regions that are going to impact the overall demand of our chemicals industry.” Additional production capacity in the U.S. and China “has really put pressure on margins,” he said.
Sabic is an important part of Crown Prince Mohammed bin Salman’s ambition to overhaul the kingdom’s economy by developing new industries and manufacturing. Saudi Aramco is preparing to buy the sovereign wealth fund’s
majority stake in Sabic as the oil producer seeks to become a global chemicals powerhouse.
“ e trade war between the U.S. and China has really created a level of anxiety in the mar- ket, which negatively impacted demand and also the prices,” Al Benyan said. Sabic is looking at additional ways to cut costs in response to the economic slowdown, he said.
Sabic last posted a quarterly loss in the rst three months of 2009, when it was struggling to integrate the plastics unit it purchased from General Electric Co.
Saudi Aramco plans to complete its takeo- ver of Sabic this year, in a push to diversify away from sales of crude oil. e two companies hav- en’t speci ed any potential cost savings from the deal. Aramco has said that the Sabic shares it won’t own will continue to trade on the Riyadh exchange.
While Sabic itself has been in the market for acquisitions in specialty chemicals, it has so far been unable to agree with Clariant AG of Switzerland about collaborating in a high-per- formance plastics venture, Al Benyan said. e Saudi state-run company acquired a 24.99% stake in Clariant in 2018, but Sabic’s takeover by Aramco has hampered its ties.
“Clariant will remain one of our future growth opportunities,” he said. “We will wait for the right moment when the market really improves in order for us to go back and negoti- ate with them.”
A rush of selling shares in SABIC saw the company’s share price fall 9.5 per cent on the Saudi Tadawul exchange and led a 9.2 per cent slump in Saudi Arabia’s stock exchange on 1 Feb- ruary. e company’s stock price has tumbled by 73 per cent this year and has hit a four-year low.™
PoLICy
Turkey tangles with neighbours in East Med and beyond
east med
OVER the past three weeks MEOG has high- lighted the tensions that have increased signif- icantly over the distribution of energy resources in the waters o the island of Cyprus; there has been no let-up in this diplomatic set to.
In June last year, Turkey deployed drilling vessels to search for natural gas in retaliation to a deal struck by Greece, e Republic of Cyprus and Israel earlier that month, in which the three states agreed to build a pipeline harnessing the
reserves of natural gas o the southern shores of the island. is pipeline – named EastMed – which is estimated to produce a pro t of $9bn over 18 years of the reserve’s exploitation, would be supplying gas from the Eastern Mediterra- nean region to countries in Europe.
Turkey has called on those countries to par- ticipate in a fair and equal distribution of the energy resources discovered o Cyprus, insisting that they are attempting to exclude and alienate
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