Saudi Basic Industries Corp (Sabic) said Sunday it would raise its petrochemicals output by about 12 million tons by the start of 2012 after it posted a 76 percent drop in second-quarter profit. But the world's largest petrochemicals firm by market value sees no improvement in petrochemical prices for the immediate future. “Prices are expected to improve within years not within days,” Chairman Prince Saud Bin Thenayan Al-Saud told Reuters. Sabic said late Saturday lower petrochemicals and metals prices led it to post the sharp drop in second-quarter net profit compared with the same period in 2008, although it reversed a net loss in the first-quarter of 2009. Investors punished the stock as it closed 8.4 percent lower Sunday after gaining more than 15 percent over the previous nine sessions. The planned output increase will mainly come from a 3.2 million tonne joint venture with China's Sinopec and – within Saudi Arabia – from Yanbu National Petrochemical Co. and the expanded Asharq petrochemical plant, Prince Saud said. Sabic produced 35.4 million tons of chemicals, 7.9 million tons of polymers and 1.3 million tons of innovative plastics last year. The results, which were slightly above average forecasts, could indicate that Sabic may face a long road in matching record profits in 2008 when demand for petrochemicals was booming. Prince Saud, told reporters here Saturday, said the Chinese government had as yet imposed no tariffs on Saudi petrochemical products over allegations of dumping. About imposition of tariffs in India on Sabic products, he said it would have no effect on Sabic's performance. “The decline in oil prices did not help improve things for us,” Prince Saud said. “For the first time, a recession combined with the end of a growth cycle for the petrochemical industry. This had a significant impact on Sabic,” he said. Mutlaq Al-Morished, Sabic Vice President for Corporate Finance said the firm did not book for goodwill depreciation in the second quarter. “The external auditors did not include it because they deemed the situation to be stable ... "Only God knows if we will need to book for goodwill (depreciation) in the third quarter,” Morished said. The company will not pay out a dividend for the first half of the year, he told Al Arabiya television earlier on Sunday. Figures released by the firm indicated a slight decline in sales during the second quarter. The volume of sales stood at 11.37 million tons, down from 11.47 million tons a year earlier.
