SABIC’s Q4 profit up 5.7%, below forecasts

MOSCOW (MRC) - Saudi Basic Industries Corp (SABIC), one of the world's largest petrochemical groups and the Gulf's biggest listed firm, reported a 5.7% rise in fourth-quarter net income, missing analysts' forecasts, said Reuters.

The company's results are closely tied to global economic growth because its products - plastics, fertilisers and metals - are used extensively in construction, agriculture, industry and the manufacture of consumer goods.

It earned 6.16 billion riyals (USD1.64 billion) in the quarter, up from a slightly revised figure of 5.83 billion riyals a year earlier. Seven analysts polled by Reuters had forecast, on average, that SABIC would record a net profit for the quarter of 6.58 billion riyals.

Operating profit rose much more slowly than net profit in the fourth quarter, edging up just 0.5% to 10.30 billion riyals.

U.S. production of shale gas has emerged as a major challenge for SABIC, threatening to make its American rivals more competitive, but Chief Executive Mohamed al-Mady said shale output would not become heavy before 2016, so the market would remain firm in 2014 and 2015.

He later told Reuters that Europe appeared to be recovering from its long economic slump so the petrochemical market there was improving, and he expected further strength.

Asked about SABIC's approach to acquisitions, Mady said it was opportunistic, but he stressed that the company was very interested in investing in the United States and China.

For the whole of 2013, net profit climbed 1.8% to 25.23 billion riyals, while company officials said sales were roughly flat at about 189 billion riyals.

As MRC wrote before, SABIC opened a new engineering thermoplastics compounding facility and a polypropylene compounding plant at its manufacturing facility in Jubail, Saudi Arabia. The products to be manufactured at the new facilities are aimed for the consumer electronics, healthcare, transportation, building and construction industries.
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MOSCOW (MRC) -- Royal Dutch Shell said profit plunged because of deteriorating refining markets and mounting losses in the Americas, surprising investors with an early earnings report that wiped out USD10 billion in shareholder value, as per Hydrocarbonprocessing.

Europe’s biggest oil company, in its first profit warning since 2004, said adjusted earnings excluding one-time items and inventory changes were about USD2.9 billion in the fourth quarter. That compares with USD4.5 billion in the previous three months and an average fourth-quarter analyst estimate of USD4.9 billion.

CEO Ben van Beurden, who took over from Peter Voser at the start of the year, is facing rising costs for new projects and stagnant oil prices. Higher exploration expenses and maintenance shutdowns have cut output volumes, while a weaker refining market and disruptions in Nigeria have also pushed down profit and limited share growth.

"Our 2013 performance was not what I expect from Shell," van Beurden said Friday. "Our focus will be on improving Shell’s financial results, achieving better capital efficiency and on continuing to strengthen our operational performance and project delivery."

As MRC wrote previously, Royal Dutch Shell third quarter 2013 earnings were USD4.2 billion compared with USD6.2 billion in the same quarter a year ago.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
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MOSCOW (MRC) -- China's top securities regulator said on Friday it has approved trade of polypropylene (PP) futures contracts at the Dalian Commodity Exchange (DCE), said Globaltimes.

The exact date of the launch of the futures will be decided by the DCE, said Zhang Xiaojun, spokesman of the China Securities Regulatory Commission.

China is the largest PP consumer in the world with an average annual growth rate of more than 10%. In 2012, PP consumption was close to15 million tonnes, with applications in packaging, household appliances, textiles, automobiles and construction.

Domestic PP users have been pushing for PP futures to reduce market volatility and strengthen China's pricing power on the international market.

Currently, two plastic products LLDPE and PVC are traded on the DCE.

As MRC wrote before, global production of polypropylene exceeds 65 million metric tons annually; UAE is one of the world's largest producers of polypropylene - the most common plastic product used in manufacturing and packaging.
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MOSCOW (MRC) -- Saudi International Petrochemical Company's (Sipchem's) interim financial results for the period ended Dec. 31, 2013, shows its net profit during fourth quarter of 2013 amounted to SR196.8 million compared to SR157.7 million for the same quarter in 2012, with an increase of 24.8% and compared to SR185.2 million for the previous quarter with an increase of 6.3%, said the producer in its press release.

Net profit during 12 months amounted to SR620.5 million compared to SR601.2 million for the same period last year with an increase of 3.2%. Gross profit during 12 months amounted to SR1.30 billion compared to SR1.27 billion for the same period last year with an increase of 2.3%.

Operational profit during the 12-month period amounted to SR1.17 billion compared to SR1.14 billion for the same period last year with an increase of 2.9%.

Earnings Per Share (EPS) during the 12-month period was SR1.69 compared to SR1.64 for the same period last year.
Reasons for increase in the quarter compared with same quarter last year is due to the increase in some of the company products' prices, especially methanol, and accordingly increase in profit margins in addition to decrease in financing costs.

Reasons for increase for the period compared with same period last year is also caused by the slight increase in the profits due to improvements in some of the company products' prices, especially methanol, taking into consideration the decrease in production and sales quantities as a result of the shutdown of company plants during Q1 for planned turnaround activities.

Reasons for increase for the quarter compared with previous quarter is as well due to the increase in most of the company’s products prices in addition to decrease in financing costs. Certain prior period amounts have been reclassified to conform with the presentation of the current period.

As MRC wrote before, Sipchem Chemicals Company (SCC) signed on July 22, 2013 an incorporation agreement with Hanwha Chemicals Corporation to form a new company, under name of "Saudi Specialty Products Company" for establishing conversion projects in Saudi Arabia.

Established in 1999, Saudi International Petrochemical Company (Sipchem) manufactures and markets methanol, butanediol, tetrahydrofuran, acetic acid, acetic anhydride, vinyl acetate monomer. Besides, it has launched several down-stream projects to manufacture ethylene vinyl acetate, low density polyethylene, ethyl acetate, butyl acetate, cross linkable polyethylene, and semi conductive compound that are scheduled to start in 2013.
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MOSCOW (MRC) - Russia's consumption of PC-granulate increased to 97,700 tonnes in 2013, up 5% compared to the level in 2012, according to MRC ScanPlast.

Exports of PC-granulate from Russia decreased to 19,000 tonnes in 2013, down 35% year on year. The largest share of Russia's exports occurred for injection moulding grades of PC to China. PC imports to Russia totalled 45,000 tonnes in 2013, down 21% year on year.
The largest share in last year's imports occurred for European injection moulding and extrusion PC-granulate.
Kazanorgsintez produced about 72,000 tonnes polycarbonate in 2013, up 11% year on year, with main volumes occurred for injection moulding and extrusion grades.

It is interesting to note that Russia's PC production in 2013 increased in line with the reduction in imports and exports, reflecting increased interest of Russian consumers to domestic PC granulate.

Suffice it to say that average monthly capacity utilisation at Kazanorgsintez was 105% in 2013. Kazanorgsintez plans to begin production of blow moulding polycarbonate to the domestic market in 2014.


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