Saudi Basic Industries Corp. (Sabic), the world's biggest petrochemicals group by market value, posted a fall in first quarter earnings, sandwiched by higher input costs and a slowdown in Chinese consumption that crimped demand. Sabic's net profit fell 5 percent to SR7.27 billion ($1.94 billion), but this was better than analysts expected. Sabic shares jumped 4.3 percent to SR102.25 in its largest daily gain since March 2011. "China was growing at a higher rate (before), then there was a slowdown in its economy, also the European slowdown...and high oil prices had an impact on raw materials cost," Chief Executive Mohamed Al-Mady told a news conference. He said that product selling prices overall continued to be satisfactory, given the circumstances, and sounded a bullish note on coming quarters. "Prices are still reasonable within the economic situation...we will make good results in the coming quarters if there are no jitters in Europe," he said. Since Sabic products are used in a wide variety of industries, from car manufacture to house construction and cheap retail goods it is highly sensitive to movements in the global economy. Sabic benefits from government subsidized gas feedstock prices, which are a fraction of international prices, but was hit during the quarter by higher liquid fuel costs. Brent crude rose 14 percent during the quarter and now hovers around the $120 per barrel mark. On average, crude prices were clearly higher year on year in the first quarter. By the end of this year, Sabic plans to launch an iron plant with the production capacity of 500,000 tons which would help boost the firm's products volume, Al-Mady said. Meanwhile, Saudi International Petrochemichal Co. (Sipchem) reported Tuesday a 25.4 increase in net profit in the first quarter of this year to SR151.6 million from SR 120.9 million for the same quarter last year and compared to SR211.2 million for the previous quarter with a decrease of 28.2 percent. Gross profit during first quarter amounted to SR334.7 million compared to SR267.3 million a year ago or 25.2 percent rise. Earnings per share climbed to SR0.41 compared with SR.33 in the period last year.
