The headquarters of Saudi Basic Industries Corp (SABIC) in Riyadh
The headquarters of Saudi Basic Industries Corp (SABIC) in Riyadh, Saudi Arabia. The company returned to profit in the third quarter amid signs of a recovery in demand. Image Credit: Reuters

Dubai: Saudi Basic Industries Corp., the chemical maker in which Saudi Aramco holds a majority stake, returned to profit in the third quarter amid signs of a recovery in demand from impact of the coronavirus.

The company, known as Sabic, said third-quarter profit was 1.09 billion riyals ($290 million) compared with 740 million riyals in the same period last year. Profit was higher mainly due to the reversal of 690 million riyals of impairments associated with Clariant AG, in which Sabic holds a 31.5% stake. Revenue in the three months to the end of September fell 11% to 29.3 billion.

Even as Sabic said it benefited with the global economy rebounding from the impact of lockdowns to stop the pandemic, it remained cautious on the outlook. “Even without Covid-19 impact, supply still exceeds demand for our key products, which will continue to pressure product prices and margins for the foreseeable future,” the company said.

Sabic reported its biggest quarterly loss in at least a decade between April and June as the virus pandemic hit sales of plastics, cosmetics and other petrochemical products. A writedown in the value of some assets hurt second-quarter profit, and that followed the company’s decision in May to suspend new capital expenditure to protect its balance sheet.

Earlier this month, Sabic announced the scaling back of a planned $20 billion facility to convert crude directly into chemicals. It’s developing the Yanbu project on Saudi Arabia’s Red Sea coast together with Aramco.

Aramco took control of Sabic earlier this year, buying a 70% stake from the kingdom’s sovereign wealth fund for $69 billion. The deal was part of the state energy firm’s plan to expand its downstream business and diversify from oil into higher-value chemicals.