Saudi Basic Industries Corp (SABIC) posted an 86 percent drop in third-quarter net profit on Sunday as the country’s top petrochemicals producer took a 1.5-billion-riyal ($400 million) charge related to its investment in Swiss specialty chemicals maker Clariant AG.
Last year, SABIC became the largest shareholder in the Muttenz-based company after it took a 25 percent stake.
SABIC has no intention of selling its stake in Clariant, but has assessed it as it does all its investments, Chief Executive Officer Yousef Al-Benyan was quoted as saying by Reuters.
Net Profit after zakat and tax fell to 830 million riyals in the three months ending September 30, from 6.1 billion riyals, a year earlier.
SABIC also attributed the fall in net income to lower average selling prices.
“A challenging environment due to slower global growth coupled with additional new capacities in key product lines coming on-stream together with a decline in oil prices exerted a downward pressure on petrochemical prices in the third quarter of 2019,” Al-Benyan said in a statement.
“We are confident about the long-term prospects of the industry and remain focused on prioritizing our discretionary growth projects” he added.
A prolonged trade war between US and China has also stifled demand for chemicals.
SABIC said its prices and margins would continue to be impacted in the fourth quarter and 2020 because of new capacities in key product lines.
The Riyadh-based company’s quarterly sales fell to 33.69 billion riyals, from 43.71 billion riyals, a year earlier.