Sipchem’s Q4 net profit slides 80.4%

JEDDAH – Saudi International Petrochemical Co (Sipchem) reported a 80.4 percent slump in fourth-quarter net profit on Wednesday, citing a production shutdown at a subsidiary and lower prices for all its products for the decline. Sipchem made a profit of SR26 million ($6.9 million) in the three months to Dec. 31, down from SR132.4 million in the prior-year period, according to a bourse filing. The company attributed the profit decrease to a drop in production as a result of a scheduled shutdown of its methanol affiliate during the fourth quarter. Nearly six weeks of scheduled maintenance at Sipchem's methanol affiliate, which concluded in mid-December, was expected to reduce the parent's profits by around 45 million riyals in the quarter, it said previously. It added that prices for all its products had declined by between 21 and 35 percent year on year. Saudi petrochemical companies have reported slumping earnings in the fourth quarter as product prices are closely linked to those of oil, while Saudi firms receive subsidized energy and feedstock. That means high oil prices give them better margins and a competitive advantage over rival manufacturers from non-oil producing regions, although this benefit diminishes as crude prices decline. Oil prices are at around 12-year lows. The mid-sized petrochemical company had reported a halving of profits in the previous two quarters as product sales prices fell. —Reuters