24/07/2016 05:52 AST

Saudi Arabia Fertilizers Company (Safco) met analyst forecasts on Thursday but extended its earnings slump, as its second-quarter net profit halved year on year as product prices remained low.

Safco, a unit of Saudi Basic Industries Corp (Sabic), made a net profit of SR299 million ($79.7 million) in the three months to June 30, compared with the SR596 million it reported in the year-earlier period, it said in a bourse statement.

The firm, which reported declining profits in 11 of the preceding 12 quarters according to Reuters data, was forecast by five analysts to make SR290.5 million during the quarter.

Safco cited lower selling prices for its products for the profit decrease, but added an increase in the quantities of products sold mitigated the impact on earnings. It didn't elaborate.

Like many petrochemical firms in the kingdom, Safco's earnings have been hit hard by falling oil prices, which have dragged down product prices and reduced the benefits to their margin of subsidised energy and feedstock costs.

These subsidies are being reformed though, a move which is expected to increase production costs by 8 percent in 2016, Safco said in December.

Last month, Safco blamed low prices and challenges in global markets for its decision to halve its planned dividend for the first half of this year.

Safco is also a big producer of ammonia and urea and, since mid-2013, manufacturers worldwide have voiced increasing concerns over the continued fall of urea prices due to China's increased output.

However, it has started to benefit from the start-up of the delayed Safco 5 plant, which began commercial operations in July last year and has an annual production capacity of 1.1 million tonnes of urea.

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