Saudi petrochemical giant SABIC Wednesday reported a 6.8 percent drop in net profit for the quarter ended September 30, compared with the same period last year. Saudi Basic Industries Corp, the largest publicly traded firm in the Gulf, said net profit fell to 5.2 billion riyals ($1.4 billion) against 5.6 billion riyals in the third quarter last year.
"The decrease in net income is attributable to lower average sales prices and lower sales quantity," the firm said in a statement to the Saudi stock exchange. SABIC is one of the world's largest producers of petrochemicals, fertilisers, plastics and metals. The company has previously said petrochemical prices were affected by the sharp fall in world crude prices from above $100 a barrel in early 2014. Prices plunged to below $30 in January but have now recovered to above $50 a barrel. SABIC also cited an increase in Zakat provisions for the decline in net income, which fell despite lower sales costs and an increase in other income.
Gross sales for the quarter were 33.3 billion riyals, down 11 percent from the third quarter last year. The result beat the average net income estimate of 5.15 billion riyals forecast by nine analysts surveyed by Bloomberg News. Saudi Arabia, the world's biggest petroleum exporter, has imposed wage cuts and other austerity measures to cope with the decline in oil prices which still provide the bulk of its revenue. The kingdom has embarked on a wide-ranging effort to diversify its economy. At a meeting of the Organization of the Petroleum Exporting Countries (OPEC) last month, Saudi Arabia reversed a two-year-old policy and agreed to an output cut in an effort to push up prices. Details are to be finalised later this year.