Saudi SABIC meets Q4 net forecast with 27 percent rise

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SABIC PROFIT: The company posted net profit of $1.55bn, compared with $1.2bn in the fourth quarter of 2009

SABIC PROFIT: The company posted net profit of $1.55bn, compared with $1.2bn in the fourth quarter of 2009

Saudi Basic Industries Corp (SABIC), the world's largest chemical firm by market value, rode an increase in output and higher prices to lift fourth quarter net profit by more than a quarter on Tuesday.

The company, a yardstick for rivals such as Dow Chemical and Germany's BASF, posted net profit of $1.55bn, compared with $1.2bn in the fourth quarter of 2009 and an average analyst forecast of $1.56bn.

Last year, SABIC benefited from higher production after adding new capacity under its Saudi-based affiliates Yansab and Sharq and under its Tianjin joint venture with Sinopec.

Its 42.9-percent owned Saudi Arabian Fertilizers Co (Safco) said on Sunday that its fourth quarter net profit tripled to $266.6m.

"Yansab and Safco made profits and (this) is the main reason behind SABIC's improved results," said Hesham Abo Jamee, chief investment officer at Riyadh based Bakheet Investment Group.

"The rise in fourth quarter profit is due to an improvement in prices in most of the petrochemical and plastics products as well as better operational performance," SABIC said in a bourse statement.

Fourth quarter operating profit rose 29 percent to $2.6bn.

Abo Jamee said SABIC was expected to make between $6.3bn and $6.6bn in profit for 2011.

High oil prices are positive for petrochemical firms because they increase product prices. SABIC usually beats rivals on profitability because it buys feedstock at lower prices.

US crude oil prices dipped on Tuesday as deliveries through a key north American supply route, the Trans-Alaskan pipeline, restarted, falling by 20 cents to $91.3 a barrel.

Profits in 2011 for Yansab and Safco are seen at $639.9m and $933.2m respectively, Abo Jamee said.

He said Kayan Petrochemicals Co, a 35 percent owned unit of the petrochemicals giant would also help SABIC as it is expected to have an output capacity of 70 percent this year at its mega complex in Jubail, on the Gulf coast.

The company will hold a news conference on Wednesday at 0700 GMT to detail its earnings.

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