Saudi Arabian petrochemical firms dragged down the bourse yesterday after Saudi Kayan, a unit of Saudi Basic Industries Corp (Sabic), reported a widening quarterly loss.
Saudi Kayan dropped 6.4% to close at its lowest since July 2009. Its net loss for the second quarter surged to 328.3mn riyals ($87.5mn), according to a statement to the Saudi bourse. This compares with a loss of 16mn riyals in the year-earlier period.
“Higher losses resulted from a decline in product prices combined with more expensive surplus inventory,” Riyad Capital said in a note. “Kayan missed our net profit estimate of 69mn riyals as well as the 101mn riyals consensus.”
Investors fear Kayan’s losses are a weak indication for Sabic’s earnings.
Chemicals giant Sabic shares fell 1.7% to their lowest close since March 2011. Analysts polled by Reuters on average expect the chemicals giant to post an 18.8% drop in quarterly profit.
Saudi Arabian Fertilisers Company (Safco), also a Sabic unit, ended flat, a day after it reported below-forecast second-quarter earnings.
“The market is weighed down by Safco and Kayan’s numbers, which ultimately means Sabic is not going to be good when they announce,” said Asim Bukhtiar, head of research at Riyad Capital. “There could be a relief rally if Sabic matches estimates, but it looks like sentiment is turning bearish on the sector.”
The kingdom’s main index lost 0.6%, trimming year-to-date gains to 3.8%.
Developer Dar Al Arkan slipped 1.1%, accounting for almost a third of all shares traded as investors lock in gains from Saturday’s 9.2% jump. It surged after the builder said it transferred $1bn to repay its Islamic bond, or sukuk.
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