JEDDAH: Saudi Basic Industries Corp (SABIC), the world's largest chemical firm by market value, rode an increase in output and higher prices to lift fourth quarter net profit by more than a quarter Tuesday. The company, a yardstick for rivals such as Dow Chemical and Germany's BASF, posted net profit of SR5.81 billion ($1.55 billion), or an increase of 26.86 percent compared with SR4.58 billion in the fourth quarter of 2009. For the whole year, net profit jumped by 138 percent to SR21.59 billion from SR9.07 billion a year ago. Last year, SABIC benefited from higher production after adding new capacity under its Saudi-based affiliates Yansab and Sharq and under its Tianjin joint venture with Sinopec. Its 42.9 percent owned Saudi Arabian Fertilizers Co. (Safco) said Sunday its fourth-quarter net profit tripled to SR1 billion. “Yansab and Safco made profits and (this) is a main reason behind SABIC's improved results,” said Hesham Abo-Jamee, chief investment officer at Riyadh-based Bakheet Investment Group. “The rise in fourth-quarter profit ... is due to an improvement in prices in most of the petrochemical and plastics products as well as better operational performance,” SABIC said in a bourse statement. Fourth-quarter operating profit rose 29 percent to SR10 billion. Abo-Jamee said SABIC was expected to make between SR24 billion and SR25 billion in profit for 2011. High oil prices are positive for petrochemical firms because they increase product prices. SABIC usually beats rivals on profitability because it buys feedstock at lower prices. Profits in 2011 for Yansab and Safco are seen at SR2.4 billion and SR3.5 billion respectively, Abo-Jamee said. He said Kayan Petrochemicals Co., a 35 percent owned unit of the petrochemicals giant, would also help SABIC as it is expected to have an output capacity of 70 percent this year at its mega complex in Jubail. “The results came in more or less in line with consensus,” said Amro Halwani, a trader at Shuaa Capital PSC in Riyadh. “I see these numbers already priced in and doubt any further upside will come from this news.” Saudi petrochemical exports reached an eight-month high of SR3.54 billion in November, mainly due to demand from China, India and other Asian countries. Petrochemicals were the second-largest export after refined oil products to be shipped that month from the Kingdom's eight ports, according to data on the website of the Saudi Ports Authority. “We would expect the market to react to these earnings in a neutral to negative manner,” Hassan Ahmed, a New York-based analyst at Alembic Global Advisors, said in an e-mailed comment.
