Saudi Basic Industries Corp. (SABIC), the world’s biggest petrochemical maker by sales, reported a 29 percent drop in fourth-quarter profit as lower oil prices reduced returns from its own products.
Net income dropped to 4.36 billion riyals ($1.16 billion) from 6.16 billion riyals a year earlier, the Riyadh-based company said in a statement today. Sales slipped 10 percent to 43.4 billion riyals. Sabic gained 0.8 percent in Riyadh trading.
Brent crude dropped 48 percent last year as rising production from North America and the Organization of Petroleum Exporting Countries swelled supply. Sabic will push ahead with plans to build investments even with low oil prices, and is in the “final stages” of talks to expand in the U.S., Chief Executive Officer Mohammed Al Mady said in an interview.
“Fourth-quarter results are not a surprise for us, we have foreseen the effects of the drop in oil prices on our business,” Al Mady said at a press conference in Riyadh. Petrochemicals demand is “good.”
Saudi Arabia, which depends on crude sales for most of its government income, is seeking to expand output of petrochemicals and refined fuels to diversify its economy. Sabic wants to diversify from products that are closely linked to crude to protect itself from price swings, Al Mady said.