RIYADH, (Reuters) – Saudi Basic Industries Corp. (SABIC), the world’s largest chemical company by market value, posted a record quarterly profit on higher prices and output, surging 50 percent and beating analysts’ forecasts.
Net income in the three months to March 31 rose to 6.3 billion riyals ($1.68 billion), or 2.51 riyals per share, compared with 4.18 billion riyals, or 1.67 riyals per share, in the year-earlier period, the state-controlled company said in a statement on the Saudi bourse Web site.
“The most significant improvement affected prices of polymers, steel and fertilisers,” Chief Executive Officer Mohamed al-Mady told Reuters by telephone from Riyadh. “Prices of other products, such as plastics, rose as well but not to the same extent,” he said.
Prices of SABIC main products rose 14 percent compared with the first-quarter, 2006, and production and sales 11 percent, the company said in the statement, without being more specific.
Analysts polled in a Reuters survey last month forecast an average 34.2 percent increase in first-quarter profit. The highest forecast was for profit of 6.18 billion riyals.
The average quarterly Asian price of ethylene, a semi-processed gas used to make chemicals, rose 17.1 percent to $1,230 per metric ton during the three months to March 31, compared with $1,050 per ton in the year-earlier period, according to Houston-based Chemical Market Associates Inc. (CMAI), a chemical consultancy company.
SABIC made 7.15 million tons of ethylene last year, its main product by volume.
Prices rose because of outages in plants in China, Taiwan and Thailand, in contrast to a decline in oil prices during the same period to which chemical prices are generally linked, Patrick Rooney, managing director for CMAI in Dubai, said on Sunday.
“SABIC is printing money because their costs are so low,” Rooney said. It costs SABIC between $250 and $300 to produce a ton of ethylene. Sales prices reached record $1,320 per ton in the third quarter, he said.
Prices of methanol rose 43 percent in the first quarter to $400 per ton, compared with $280 per ton in the year-earlier period, Rooney said. SABIC sold 4.09 million tons of methanol last year.
Base chemicals account for about 40 percent of SABIC’s output, according to the company Web site. It also produces plastics, fertiliser and steel.
SABIC is the Middle East’s largest steel producer. It made 3.77 million tons last year.