Saudi Basic Industries Corporation, which plans to cut jobs and close plants in Europe, reported a 10 per cent drop in first-quarter profit as production and sales at its units declined.
Net income fell to 6.56 billion Saudi riyals from 7.27bn riyals a year earlier, the Riyadh-based company said in a statement to the Saudi stock market on Sunday. The mean estimate of eight analysts was for a profit of 6.53bn riyals, according to data compiled by Bloomberg.
The drop in profit was because of lower production and sales volumes due to maintenance works in some affiliates, Sabic said. "The improvement in sales prices of certain products has reduced the impact," it said, without giving further details.
Sabic, the world's biggest petrochemicals maker, said last week it plans to cut about 1,050 jobs and close some assets in Europe as it responds to diminished demand. Sabic joins peers including Akzo Nobel and BASF in slimming down operations that are taking the brunt of a prolonged slump affecting construction and infrastructure as well as consumer spending on cars and appliances.
The company also faces stiffer competition from a revived US chemical and plastics industry that's benefiting from shale gas supplies, as well as increased production among Asian peers seeking to satisfy their demand locally. Sabic in 2007 bought General Electric's plastics unit for $11.6 billion as part of a global expansion drive.
"Second-quarter earnings depend on oil prices and performance of plants," Sabic chief executive Mohamed Al Mady said. "The financial situation worldwide is fluctuating also, hence we can't tell how we will perform during the rest of this year."
Sabic is majority owned by the Saudi government, according to Bloomberg data. Saudi Arabia is the world's biggest oil exporter.
The company is looking at cutting costs, boosting output and tapping new markets for its products, Mr Al Mady said. Sabic is also studying investment possibilities in North America, he said, without giving further details.
* Bloomberg News