Yanbu National Petrochemical Co's (Yansab) posted its first profit in two years as it started of commercial operations and as the prices of its products improved. The affiliate of Saudi Basic Industries Corp (SABIC) swung to a net profit of 259 million riyals ($69.1 million) in the first quarter from a net loss a year earlier - its first gain in at least two years, according to Reuters data. “The reason for profits is the start of commercial operations and the increase in volume of production and sales, as well as a improvement in prices for petrochemicals,” Yansab said in a bourse statement. The company, which has a total annual production capacity of 4 million tons of petrochemical products, started full commercial production last month. Quarterly operational profit reached SR310 million. “Operating earnings beat our estimates, stemming from higher utilization rates and stronger margins,” Sriharsha Pappu, research analyst at HSBC said in a note commenting the earnings. HSBC estimated that Yansab's operating margins would be 39 percent while the reported margins were 45 percent, Pappu said. HSBC has assumed operating rates of 80 percent “while reported numbers indicate that the company probably operated close to full capacity,” he added. SABIC owns 51 percent of Yansab whose shares gained more 350 percent since it sold shares to the public in 2006. After the earnings announcement, Yansab's shares closed 0.2 percent lower. Meanwhile, Saudi Kayan Petrochemical Company said on Wednesday it trimmed its first-quarter net loss to SR3.77 million. Kayan, a unit of SABIC, plans to bring online the first unit at its Jubail petrochemicals complex in the second half of 2010 and start other units slowly through 2012, its chairman said. Kayan made a net loss of SR6.26 million in the same period last year, it said in a statement on the bourse website. The firm said it incurred the losses because the plant is still in the non-operational stage. The complex will have an annual production capacity of 6 million tonnes of petrochemicals including ethylene, propylene and ethylene glycol from 16 plants.
