Saudi Arabia Basic Industries Corp. (SABIC), the world’s largest chemicals company by market value’s profits jumped in the second quarter as the economy recovered from COVID-19, boosting products ranging from plastics to paint.
The Riyadh-based company, which is controlled by state oil producer Saudi Aramco, recorded a profit of $2 billion in the first three months of the year, the highest quarterly figure in nearly a decade and up about 60 percent from the same period last year. Its overall revenue increased by 72 percent year over year to $11.3 billion.
Chemicals makers are expecting a steep rise in earnings. Global demand for packaging and flooring and roofing materials has surged significantly this year along with economic re-openings. Germany’s BASF, the world’s biggest chemical maker by sales, recently raised its full-year profit forecasts.
Chemical components used to create plastics, solvents, and other construction materials, such as polyethylene and polyvinyl chloride, have reached new heights. The sector is also still rebuilding from a severe supply shortage caused by February storms in the United States, resulting in market turmoil.
Yousef Al-Benyan CEO SABIC
“Our margins were boosted by higher product prices and sales volumes, supported by healthy demand and tight supply conditions for most key products. We see there is still healthy demand on our core products and we expect the second half will remain more or less similar to the first half of 2021.”
SABIC’s board of directors recommended a cash dividend of $0.5 per share for the first half of 2021 in June, up from $0.5 a year ago, when the company was going bankrupt. Since the end of 2020, the stock has increased by 22 percent, outperforming competitors like BASF and Dow.
As the kingdom seeks to shift its dependency on oil, it expects chemical companies like SABIC, which has a market capitalization of $99 billion, to serve as the foundation for new manufacturing and consumer products industries.
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