Saudi Arabia’s SABIC swings to Q3 net loss on Hadeed sale

SINGAPORE (ICIS)–Saudi petrochemical giant SABIC has incurred a third-quarter net loss of Saudi riyal (SR) 2.88bn ($768m), reversing the weighed down by one-off non-cash losses related to the divestment of its steel subsidiary.

in billion Saudi riyal (SR)	Q3 2023	Q3 2022	% change	Jan-Sept 2023	Jan-Sept 2022	% change
Sales	35.98	43.32	(16.9)	106.50	143.54	(25.8)
Operating income	1.68	3.38	(50.3)	5.08	22.40	(77.3)
Net profit	(2.88)	1.84	N/A	(0.35)	5.41	N/A

Non-cash losses worth SR2.93bn were related to the sale of SABIC’s entire stake in the Saudi Iron and Steel Co (Hadeed) by Public Investment Fund (PIF).

The losses “attributable to the effect from fair value re-measurement” of Hadeed accounted for about 80% of the total third-quarter non-recurring charges of SR3.69bn

In early September, SABIC announced it had agreed to sell Hadeed to PIF for SR12.5bn.

“Note that this deal [sale of Hadeed stake] will enable SABIC to focus on its strategic business portfolio, to maintain its leadership competitiveness and prepare the company for a new era of growth in the field of petrochemicals,” SABIC said in a filing to the Saudi bourse.

From continuing operations, SABIC’s Q3 net profit shrank 67% year on year to SR536m because of weak global demand and lower product prices.

Its petrochemicals segment posted an Q3 earnings before interest, tax, depreciation and amortisation (EBITDA) of SR4.4bn, with revenues at SR33.5bn and an operating profit of SR710m.

For the first nine months of 2023, petrochemicals’ EBITDA fell by 46% year on year to SR12.5bn, while revenues were down 23% at SR99.1bn. Its operating profit for the period shrank 82% to SR2.53bn.

SABIC said that its share in the financial results of its joint ventures in the third quarter declined to SR919m due to lower sales volume and prices.

An impairment loss of SR255m was also recorded “as part of the restructuring program in Europe to improve the return on investment”, the company said.

SABIC, which is 70%-owned by energy giant Saudi Aramco, estimates a $3.5bn-3.8bn in capital expenditures for the whole of 2023.

($1 = SR3.75)