Tweet07-08-2011 om 14:00 by Maastricht Region Branding Foundation

Mohamed Al-Mady, SABIC Vice Chairman and CEO, said that the company’s results for the Second Quarter 2011 has exceeded the expectations of economic analysts, thanks to the efforts of employees and the various programs that have been initiated by the company over the years to transform SABIC into a truly global company.

Speaking at a press conference at SABIC headquarters in Riyadh on July 17, Al-Mady pointed out that these record results reported by SABIC are attributed to a boost in sales volumes and higher prices for some products, leading to increased net income for the company. He added that the volatile global economic changes did not have any impact on SABIC’s operations for several reasons. They include the diversity of SABIC’s markets, and its proximity to customers at locations where it produces, especially in developing markets such as China, India and Saudi Arabia.

On the global economic downturn and its impact on the petrochemical sector, Al-Mady said that the state of the global economy cannot be linked directly to conditions in the petrochemical industry. The market is governed by supply and demand, and there is a scarcity of some commodities in the market such as fertilizers, which require concerted efforts by countries to feed the peoples of the world. The same is also true with the auto industry that is growing constantly and consumes plastic materials. This also holds good with the electronics industry. All industries are impacted by the economic variables, with the construction and building industry being the most affected sector, he said.

The Second Quarter results show a marked improvement from the previous Quarter and confirm that the diversity of SABIC’s products reduces the risks facing the market. SABIC produces steel, fertilizers, polymers, chemicals and value-added performance chemicals. SABIC enjoys financial stability and its products are present in diverse markets.

As regards the market’s concerns for rising steel prices, Al-Mady said that the prices are almost fixed despite the increase in feedstock prices. However, SABIC hopes that this does not affect the company because if the feedstock prices increase beyond reasonable levels, SABIC may be forced to raise prices. The current changes make the company hopeful of maintaining growth and continuing to achieve record results. Al-Mady confirmed that SABIC continues to grow and make new investments. It has new projects coming up in 2012-2015.

Speaking about Performance Chemicals, Al-Mady pointed out that SABIC is expanding its basic chemicals line to produce high performance materials. Strategic agreements have been finalized with partners including Mitsubishi Rayon, Montefibre, Exxon Mobil, Lurgi and Asahi, to produce Methyl Methacrylate, Polymethylmethacrylate, Carbon Fiber, Elastomers and Sodium Cyanide. Al-Mady said, “SABIC is committed to expansion into these new areas of specialized materials, particularly synthetic fibers, which feed many large industries, including aircraft, wind turbines, sports products, automobiles and electronics.”
On SABIC’s investments in the Egyptian market, Al-Mady said, “We have no production plants in Egypt, but we have a sales office. We face no obstacles there under the prevailing circumstances. Egypt is a large country and its needs are large. We are ready to meet these needs if we feel that there are real opportunities.”

Al-Mady attributed the company's record results to the increasing demand for SABIC’s products, increased production and sales, and improved prices. SABIC constantly studies the market, and is committed to strong performance and to reliable and safe operations, meeting all safety standards. These are all important elements to continued success, he said.

On challenges for the future, Al-Mady said that sustaining growth and constantly achieving better results remains the company’s biggest challenge. The market continues to be demanding, along with the challenges of maintaining operations efficiency. SABIC is focused on operations reliability and high production capacities, while maintaining operational security, as reliability is a commitment in all company operations. Other challenges, such as technology and employee training, are issues that can be dealt with and managed, he said.

In answer to a question on the problems faced by some companies with the Ministry of Commerce and Industry on steel prices and SABIC’s stand on this issue, Al-Mady said that supply and demand are subject to many variables including feedstocks. It is necessary to achieve a balance between the public interest and the interests of operating companies. At present, there is a production shortfall, he said, which makes it difficult to achieve a balance. The consumer may be affected by this scarcity of products. SABIC continues its efforts to achieve this balance through operations of its plants at full capacity. It is expected to step up production capacities of steel soon by nearly one million tons, which would decrease the effect of the crisis and prevent impact on prices, he said.

SABIC announced its financial results for the 2Q 2011 on July 16. It reported net income of SR 8.1 billion for the 2Q 2011, compared to the net income of SR 5.02 billion for the same quarter last year, representing an increase of 61 percent and compared to the net income for first quarter of 2011 of SR 7.69 billion, representing an increase of 5 percent.

The gross operating profit for the Second Quarter ended June 30, 2011, amounted to SR 16.49 billion, compared to SR 11.85 billion for the same quarter last year, representing an increase of 39 percent. The income from operations for the second quarter of this year amounts to SR 13.28 billion, compared to SR 9.14 billion for the same quarter last year, representing an increase of 45 percent.

The net income for the six months ended June 30, 2011, amounts to SR 15.79 billion, compared to SR 10.45 billion for the same period in the preceding year, representing an increase of 51 percent. The earnings per share for the six months ended June 30, 2011 amounted to SR 5.26, compared to SR 3.48 for the same period in the previous year.

The gross operating profit for the six months ended June 30, 2011, was SR 31.92 billion, compared to SR 24.05 billion for the same period the previous year, representing an increase of 33 percent. The income from operations for the six months ended June 30, 2011, was SR 25.78 billion, compared to SR 18.84 billion for the same period the previous year, representing an increase of 37 percent.

Source: Sabic

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