Saudi Arabian Basic Industries Corporation (SABIC) has made a net profit of SR6.17 billion ($1.64 billion) in the three months ending June 30, announced at a press conference held at its headquarters on Sunday.
The net profits of SABIC declined by 21.63 percent in the first half of this year, compared with same period of the previous year, amounting to SR10.11 billion.
The corporation explained in a statement on its Tadawul site that its net profit during the second quarter amounted to SR6.17 billion, down by 4.49 percent from the same quarter of the previous year, and an increase by 57 percent from the previous quarter, indicating that the profit per share amounted SR3.37 versus SR4.3.
Speaking to reporters, acting CEO of the organization Yousef Abdullah Al-Benyan attributed the results to lower average of products selling prices, noting that there is a decrease in the costs of sales.
The company's results are closely tied to oil prices and global economic growth because its products plastics, fertilizers and metals are used extensively in construction, agriculture, industry and the manufacturing of consumer goods.
Lower oil prices adversely affected SABIC 's earnings in the final quarter of 2014 and the company warned in January that 2015 earnings would be unpredictable, with challenges especially prominent in the early part of the year.
He said that his company has plans to expand investment in the US shale gas projects through joint ventures.
SABIC had signed an agreement with Houston, Texas-based Enterprise Products Partners L.P. to get shale gas. He said it may use the feedstock in the United States and export it to other countries, including the UK.
SABIC has converted crackers at the UK plants to use shale gas as feedstock to produce olefins and their derivatives more competitively.
He also pointed out that SABIC will not directly involve in the Kingdom's shale production. He hoped that the discovery of shale gas in the country will pave the way for opportunities for indirect investments for SABIC .
Al-Benyan said product prices in the second quarter were on average 20 percent higher than in the previous quarter.
Individual clients' demand allowed SABIC to boost production by 2 percent from the previous quarter and managed its costs carefully, the CEO said.
He said that the company has drawn up a comprehensive program till 2025, which focuses on steady growth, encourage competitiveness and shareholders benefits.
Answering a question, he said China is an important market to SABIC and it has its own challenges during implementation of programs. He added that the United States and Europe were not much affected by the falling oil prices.
He noted that the company has some 2,000 workers all over the world attached to research and development, their services go a long way in finding new technologies, increasing competitiveness and help the company to initiate effective communication with other partners to develop its businesses.
In keeping with the Kingdom's regulations, he said SABIC is interested to employ more women in its various departments. "In fact, we had a meeting in the morning to consider various programs for women," he added.
Reacting to the results, NCBC said this is significantly higher than the NCBC estimates of SR4.8 billion and its revised estimates of SR4.9 billion. Higher than expected gross margins and lower minority interest led to the deviation in earnings, it added.