DUBAI: Saudi Arabia Fertilizers Co (SAFCO) missed analysts' forecasts and extended its earnings slump, reporting a 51.5 percent decline in first-quarter net profit on Sunday.
SAFCO, a unit of Saudi Basic Industries Corp (SABIC), made a net profit of 286 million riyals ($76.3 million)in the three months to Mar. 31, down from 590 million riyals in the year-earlier period, it said in a bourse statement.
The firm, which had reported declining profits in ten of the preceding 11 quarters according to Reuters data, was forecast by analysts to make 314.6 million riyals during the quarter.
SAFCO cited lower selling prices for the company's products for the first-quarter profit fall. An increase in quantities sold helped offset some of the impact, it added.
Saudi companies issue brief earnings statements early in the reporting period before publishing more detailed results later.
Like many petrochemical firms in the kingdom, SAFCO's earnings have been hit hard by falling oil prices, which have dragged down product prices and reduced the benefits to their margin of subsidised energy and feedstock costs.
These subsidies are being reformed though, a move which is expected to increase production costs by 8 percent in 2016, SAFCO said in December.
SAFCO is also a big producer of ammonia and urea and, since mid-2013, manufacturers worldwide have voiced increasing concerns over the continued fall of urea prices due to China's
increased output.
However, it is beginning to benefit from the start-up of the delayed Safco 5 plant, which began commercial operations in July last year and has an annual production capacity of 1.1 million
tonnes of urea.
As part of SABIC review of investment, SAFCO said last month it was considering taking full control of chemical fertiliser producer Ibn Al-Bayttar by buying out its joint venture partner.
Reuters
