Sabic headquarters in Riyadh Image Credit: Courtesy Sabic

Dubai: Saudi Basic Industries Corp.’s second-quarter profit plunged 68%, missing the lowest analyst estimate, as chemical prices declined.

Net income fell to 2.12 billion riyals ($565 million) from 6.7 billion riyals a year ago, the biggest petrochemicals maker in the Middle East said in a statement. The average estimate of five analysts was for a profit of 3.37 billion riyals.

‘The new capacities in key products lines that pressured Sabic’s product prices and margins in the first half of 2019 are expected to continue to impact the company’s earnings in the second half of 2019,’ the company said. Sabic said there is no change to its previous outlook.

Lower revenue was ‘driven by a continued slowdown in demand growth and new supply capacities coming on-stream in the key product lines,’ the company said.

Sabic said last week it suspended talks with Clariant AG on their high-performance plastics venture a day after the Swiss company’s Chief Executive Officer Ernesto Occhiello unexpectedly quit. Sabic cited ‘current unfavorable market conditions’ for halting talks and said it’s looking forward to continuing the discussions once conditions improve.

Saudi Aramco, the world’s biggest oil producer, is in the process of buying a majority stake in Sabic from the kingdom’s sovereign wealth fund for $69.1 billion. The Middle East’s biggest ever deal had been first mooted last year after the initial public offering of Aramco was postponed because investors balked at the crown prince’s $2 trillion valuation.