Saudi bourse edges up despite poor Sabic results

27/10/2014 06:23 AST

Shares in Saudi Basic Industries Corp (Sabic) fell in early trade on Sunday after disappointing third-quarter results, but gains in other stocks offset its slide and lifted the index.

Sabic slid 1.2 per cent after posting a 4.5 per cent decrease in third-quarter profit on Sunday, missing analysts’ estimates. The company made 6.18 billion riyals ($1.65 billion) in the quarter, against analysts’ average forecast of 6.63 billion riyals. It blamed a drop in sales and other income - a negative signal for all Gulf energy and petrochemical exporters.

The recent decline in global oil prices will prove temporary even if it lasts a year or so, since population growth will ultimately bring higher consumption and prices, the chief executive of Saudi Basic Industries Corp said on Sunday.

Mohamed al-Mady was speaking to reporters after the company, one of the world’s largest petrochemicals groups and the Gulf’s largest listed company, reported a 4.5 percent drop in third-quarter net income, missing analysts’ forecasts.

It blamed sluggish third-quarter sales, which edged down to 48.71 billion riyals ($12.99 billion) from 48.80 billion riyals a year earlier.

Oil prices had an impact on Sabic’s earnings through the prices of raw materials and final products, Mady said, adding that the impact was not predictable because oil prices were subject to economic and political factors.

He said China was a big, growing market for SABIC but there were changes in consumption there. The company still aims to grow its business in China and is looking for investments there, he said.

Sabic’s Safco 5 fertiliser project and its Kemya synthetic rubber project, a venture with Exxon Mobil Corp, are on track, Mady said. Both projects are in the process of being established.

But Saudi Arabia’s main index, down 0.2 per cent at one point, quickly moved out of the negative zone and edged up 0.4 percent on the back of other stocks.

Shares in Saudi Arabian Mining Co 1211.SE (Ma’aden), the Gulf’s largest miner, jumped 3.2 percent after it beat analysts’ forecasts on Thursday and reported a smaller-than-expected profit decline.

The company’s net profit in the three months to Sept. 30 was 485.4 million riyals, while analysts surveyed by Reuters had forecast on average that Ma’aden would report a profit of 383 million riyals.

Food maker Savola Group 2050.SE rose 2.7 percent after posting a 53.3 percent jump in third-quarter net profit on Thursday. The firm made 701.4 million riyals, while analysts had forecast 650 million riyals.

The firm also said on Thursday that it would distribute a third-quarter dividend of 0.75 riyal per share, up from 0.5 riyal in the same period of 2013.

Agencies