Saudi’s Yansab Q1 net profit up 41% — statement

Dubai: Saudi Arabia’s Yanbu National Petrochemical Co (Yansab) reported a 41 per cent rise in first-quarter net profit on Wednesday, beating analysts’ forecasts. The firm, a subsidiary of Saudi Basic Industries Corp (SABIC), made a net profit of 401.9 million riyals ($107.2 million) in the three months to March 31, up from 285.1 million riyals in the same period of 2015, it said in a bourse filing.

Five analysts polled by Reuters on average forecast Yansab would make a quarterly profit of 310.8 million riyals.

Yansab attributed the increase in profit to decreases in feedstock prices, which helped boost profit despite lower average sale prices for most products.

Saudi companies issue brief earnings statements early in the reporting period before publishing more detailed results later.

The increase came after four quarters of falling profits for Yansab. Like many petrochemical firms in the kingdom, the company’s earnings have been hit hard by falling product prices, as they are closely tied to slumping oil prices.

Saudi producers have benefited from subsidised energy and feedstock costs, so lower crude prices compress their margins.

That is changing though, as the Saudi government reforms energy subsidies to help it close a substantial budget deficit.

Yansab said in February that fuel and electricity price hikes would raise its production costs by 1 per cent in 2016.

This was lower than the 6.5 per cent estimate given at the end of last year.