Saudi Basic Industries Corp (SABIC) has combined its chemicals and polymers businesses and will spin off its steel unit as part of its restructuring efforts to counter the depressed oil market and weak product prices.
Chief Executive Yousef Abdullah al-Benyan was speaking after the firm, one of the world's largest petrochemicals groups, reported a 6.8 percent drop in third-quarter net profit, its ninth successive quarter of declining earnings.
Global petrochemical companies have been hit hard by low oil prices, which have dragged down product prices and forced firms to implement cost-saving strategies aimed at stemming the damage from lost revenues.
Having already reorganised its innovative plastics unit - the old GE Plastics business it bought in 2007 - at the end of 2015, Benyan said SABIC had last week combined chemicals and polymers into one unit called petrochemicals.
It would also reclassify its struggling Hadeed steel firm as an independent company in which SABIC would retain ownership but Hadeed would market its products and manage itself.
No timeframe was given for this move.
"Restructuring had a positive impact on our performance in 2016 and it will help SABIC to maintain strong operations and face challenges through cutting costs and increasing reliability," said Benyan.
SABIC has reduced its cost of sales by 15 percent and had increased its production by 3 percent through efficiencies year-to-date, Benyan said, adding the company was seeking to do more as it expected 2017 to be "a quite challenging year for us".
Pressure on product prices remains a significant drag on SABIC - sales in the third quarter were down 10.8 percent year on year to 33.31 billion riyals.
This helped reduce net profit in the three months to Sept. 30 to 5.22 billion riyals ($1.39 billion).
While down from 5.60 billion riyals in the year-earlier period, it was broadly in line with the 5.05 billion riyals average forecast of five analysts.