SABIC posted a net loss of $253.33mn in the first quarter of 2020, a decrease of 20% compared to net losses of $210.67mn posted in the previous quarter.
Total sales during the first quarter amounted to $8.22bn, a decrease of 18% compared to the same quarter of 2019, and a decrease of 6% against the previous quarter.
The chemical sector is designated as critical infrastructure in many of the world’s largest economies and many of SABIC’s manufacturing sites are excluded from governmental shutdown orders. They remain operational, operating under increased health and safety standards aligned with local government measures and guidelines issued by the World Health Organization.
Yousef Abdullah Al-Benyan, vice chairman and CEO of SABIC, said: “Product prices remain challenged with no improvement in the supply/demand balance for key products in the first quarter of 2020 compared to the previous quarter. This was further aggravated by Covid-19 becoming a global pandemic and the significant decline in oil price towards the end of the quarter.”
“Health and safety is always the priority for SABIC. We have spared no effort in safeguarding our people and their families as they perform their duties and ensuring safe and reliable operations in challenging conditions amid Covid-19. SABIC is part of the essential industries that are fighting the coronavirus pandemic. More than ever, we are on the front lines and actively contributing to the response in Saudi Arabia and globally. I would like to thank SABIC’s employees for putting in extra effort to ensure reliable and safe operations and enabling us to continue delivering our products and meeting our customers and communities’ requirements.”
Al-Benyan concluded: “SABIC is committed to capital discipline and maintaining a strong balance sheet and has suspended all capex, but non-discretionary capex for safe and reliable operations and late stage projects. We are confident in the resilience and strength of our operations and supply chain, and on opportunities which exist for long term growth.”
In its earnings statement, SABIC said it expected a negative growth rate for global GDP in 2020 due to the impacts of Covid-19. Despite seeing business improvements recently in China, elsewhere the company anticipates negative impacts on demand and market sentiment in the second quarter of 2020 and potentially later in the year. This along with an oversupply in SABIC’s key products will put further pressure on product prices and margins.
In response to the Covid-19 outbreak, SABIC has focused efforts towards three priorities: protecting its people and communities, ensuring continued operation as an essential industry, and securing the supply of basic and critical goods.
To date, SABIC has made donations to help the global response to the pandemic totalling over $45mn. SABIC has also committed matching donations made by its employees to Covid-19 charities.
The majority of SABIC products are considered essential during this crisis and the company is not only supplying material but also support customers in the selection process for material needed for many life-critical applications. These include hygienic products, emergency ventilators and personal protection equipment for healthcare professionals, security bodies and supermarkets, but also food and non-food packaging, and more.
The company has a continuous focus on sustainability and innovation. As a part of our continuous effort in this area, SABIC is joining forces through the World Economic Forum’s Collaborative Innovation for Low-Carbon Emitting Technologies initiative. This is a CEO-led initiative to accelerate the development and upscaling of the low carbon-emitting technologies for chemical production and related value chain. SABIC is leading the Waste Processing technology cluster, which is one of the five prioritised technology clusters that will aim at fostering the formation of alliances for the collaborative implementation of the identified technologies.
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