SABIC, one of the world’s largest petrochemical companies, has reported a significant decline in third-quarter revenue and a net loss.
In their filing, SABIC revealed a net loss of 2.88 billion riyals ($768M) for the three months ending on September 30, in contrast to a profit of SAR 1.84B in the same period the previous year.
The loss was primarily due to an impairment charge of SAR 2.93 billion related to the fair value of Saudi Iron and Steel Company (Hadeed) following Saudi Arabia’s sovereign wealth fund’s acquisition of SABIC’s entire stake in the company.
SABIC’s Hadeed Divestment Enhances Strategic Focus
In September, SABIC agreed to divest in Hadeed, allowing the petrochemical giant to streamline its strategic portfolio and focus on its core business.
SABIC also reported a drop in revenues, with figures decreasing from SAR 43.32B in the previous year to SAR 35.98B, according to Gulf Business.
However, there was a nearly 6% increase in revenue compared to the previous quarter. SABIC attributed these challenges to weak global demand and increased supply in the global petrochemical market.
While the average selling price declined by 5% compared to the previous quarter, prices for agri-nutrient products increased by 11%. The company remains disciplined in managing its capital expenditure, estimating it to be in the range of $3.5B to $3.8B for 2023.
Chemical manufacturers had anticipated challenges in the second half of the year due to a slower-than-expected recovery in China following its post-pandemic reopening and reduced demand in Europe. SABIC’s shares have declined by nearly 15% over the course of the year.