Saudi Basic Industries Corp. posted a net loss of 1.89 billion riyals ($504 million) in the fourth quarter, according to a statement, compared with analysts’ expectation of a 951.7 million riyals profit in data compiled by Bloomberg. Full-year profit also missed forecasts, highlighting the challenges posed by industry overcapacity and tepid demand.
Chemicals giants around the world are trying to cope with elevated costs and compressed margins amid ongoing concerns over the global economy and the strength of demand. Forecast supply additions in China and the renewed risk of headwinds from potential trade and tariff wars may make a recovery even tougher.
“Overcapacity continues to be a challenge, especially for polymers,” Sabic Chief Executive Officer Abdulrahman Al-Fageeh said in a statement. “Ethylene demand growth remains slower than capacity growth, leading to sustained pressure on capacity utilization rates.”
The company said global prices for some of its key petrochemicals, including polyethylene declined in the final stretch of 2024 due to pressure from excess supply and weak demand growth.
The shares dropped as much as 2.1% in Saudi trading to the lowest price level since 2020.
Last month, Dow Inc. said it’s planning to idle some chemicals capacity due to still-challenging conditions. LyondellBasell Industries NV noted it’s on watch for catalysts that may support more demand but remains cautious on potential headwinds. BASF SE recently warned it expects to miss full-year estimates when it reports later this week and flagged earnings momentum that “declined considerably” in the chemicals segment last quarter.
Facing Oversupply
Analysts expect Sabic to continue to face oversupply in 2025. Still, operational efficiency, a strong balance sheet and backing from Saudi Arabia’s government are positives for the company, said Salih Yilmaz, senior analyst at Bloomberg Intelligence. Moody’s Investor Service recently upgraded Sabic’s credit rating, citing competitive costs and strong liquidity, among other factors.
The company’s fourth-quarter revenue of 34.7 billion riyals was the lowest in a year and fell short of analysts’ estimates. The company forecast 2025 capital expenditure of $3.5 billion to $4 billion.
Saudi Aramco, the world’s biggest oil exporter, owns a majority of Sabic and is due to report earnings on March 4.
