SABIC Reports 84% Surge in Net Profit in Q2 2024
The petrochemical giant Saudi Basic Industries Corp. (SABIC) has witnessed an impressive 84 percent year-on-year increase in net profit, soaring to SR2.18 billion ($564 million) in the second quarter of 2024. This remarkable growth was driven by higher margins and the implementation of new zakat regulations.
Gross profit also saw a substantial 32 percent rise to SR7.19 billion, fueled by improved margins on key products and increased sales volume. However, this growth was partially offset by non-recurring charges. While sales increased in the Americas, they declined in Europe and remained steady in China, the Middle East, and the Rest of Asia.
A significant highlight was the reversal of the zakat provision, resulting in a benefit of SR545 million in the second quarter of 2024, compared to an expense of SR440 million in the previous year, attributed to recent regulatory updates.
On the financial front, lower gains from the fair valuation of derivative equity instruments resulted in a decrease of SR556 million in non-cash finance income. Furthermore, there was a reduction of SR226 million in losses from discontinued operations in the current quarter.
CEO of SABIC, Abdulrahman Al-Fageeh, commented on the global economic landscape, noting a slight decline in the second quarter of 2024. He highlighted unexpected downturns in major countries’ economic indicators but also pointed out improvements indicated by the purchasing managers index data.
Al-Fageeh emphasized the signs of recovery in global trade, driven by higher exports, inventory restocking, and increased financial activities. As inflationary pressures ease, some central banks have started reducing interest rates, potentially stimulating the global economy further.
Sustainability remains a top priority for SABIC, with the company introducing a new certified low-carbon product portfolio to advance its 2050 carbon-neutrality goal. This move aims to support customers in their sustainability efforts and facilitate expansion into new markets, aligning with SABIC’s commitment to delivering quality products and services responsibly through innovation and operational excellence.
Looking ahead, SABIC anticipates a global gross domestic growth of 2.7 percent in 2024. The company remains focused on strategic portfolio optimization, restructuring underperforming assets, and prioritizing sustainability and innovation. SABIC plans to maintain a disciplined approach in managing CAPEX, projecting spending at the lower end of the $4 to $5 billion range for 2024.