SABIC still keen on Clariant joint venture once conditions improve

SABIC still keen on Clariant joint venture once conditions improve
FILE PHOTO: The headquarters of Saudi Basic Industries Corp (SABIC) is seen in Riyadh, Saudi Arabia April 19, 2016. REUTERS/Faisal Al Nasser Copyright Faisal Nasser(Reuters)
By Reuters
Share this articleComments
Share this articleClose Button

By Marwa Rashad

RIYADH (Reuters) - Saudi Basic Industries Corp (SABIC) <2010.SE>, the world's fourth-biggest petrochemicals firm, said on Sunday it has no interest in taking over Swiss chemicals firm Clariant <CLN.S> but remains keen on a partnership once market conditions improve.

Some analysts have said that SABIC, which owns a 25% stake in Clariant, could consider taking over the company after the Swiss firm last week saw its chief executive quit, announced a loss for the first half of the year and shelved its joint venture plans with SABIC.

"We have no interest in a full takeover, if that's your question, but we have interest to grow our share and make sure that we can bring positive growth and retain investment for SABIC and Clariant shareholders," SABIC CEO Yousef al-Benyan told a news conference.

"Our investment in Clariant is a strategic, long-term investment, we will continue to look at this investment from (the perspective of) growth opportunities," he said.

Benyan was speaking after the Saudi firm reported a 68% drop in second-quarter net profit, its lowest quarterly profit since late 2009.

He said the announcement on Thursday of the deferral of talks over a joint venture, to combine Clariant's additives and specialty masterbatches businesses with parts of SABIC's specialty chemicals operation, was due to changes in market conditions.

"We hope that as market conditions improve there will be another round of talks in this regard," Benyan said.

Citing lower average selling prices and a decrease in the share of contributions from associates and joint ventures, SABIC said net profit fell to 2.12 billion riyals (456.6 million pounds) in the April-June quarter, from 6.7 billion riyals in the same period a year earlier.

EFG Hermes had projected a net profit of 2.67 billion riyals.

SABIC expected to see a "more or less" similar performance for the second half of the year give current market conditions, Benyan said, adding that the firm would focus on reliability, cost management and offering customers varied solutions.

"The slowdown in global GDP growth coincides with a decline in petrochemical prices due to a significant increase in new supply capacity resulting in lower product prices and margins in key product lines," he said in SABIC's results statement.

SABIC said the new capacities in key product lines that pressured its 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.

(Reporting by Marwa Rashad; Writing by Saeed Azhar; Editing by Ghaida Ghantous and Susan Fenton)

Share this articleComments

You might also like