|17 October, 2016

Saudi's SAFCO continues earnings slump with 68 pct Q3 profit drop

SAFCO, a unit of Saudi Basic Industries (SABIC), made a net profit of SAR181.4 million ($48.4 million) in the three months to Sept 30.

An investor walks past a screen displaying stock information at the Saudi Stock Exchange (Tadawul) in Riyadh, Saudi Arabia. Image used for illustrative purpose.

An investor walks past a screen displaying stock information at the Saudi Stock Exchange (Tadawul) in Riyadh, Saudi Arabia. Image used for illustrative purpose.

REUTERS/Faisal Al Nasser
DUBAI, Oct 17 (Reuters) - Saudi Arabia Fertilizers Co (SAFCO) missed analyst forecasts and extended its earnings slump on Monday, reporting a 68 percent decline in third-quarter net profit.

SAFCO, a unit of Saudi Basic Industries Corp (SABIC), made a net profit of 181.4 million riyals ($48.4 million) in the three months to Sept. 30, down from 566.1 million riyals in the year-earlier period, it said in a bourse statement.

The firm, which had reported declining profits in 12 of the preceding 13 quarters according to Reuters data, was forecast by five analysts to make 249.2 million riyals during the period.

SAFCO cited a drop in the selling prices of its products, an increase in costs which include electricity, and an increase in urea supply that has impacted its selling price, as reasons for the decline in profits.

Like many petrochemical firms in the kingdom, SAFCO's earnings have been hit hard by falling oil prices, which have dragged down product prices and reduced the benefits to their margin of subsidised energy and feedstock costs.

SAFCO is also a big producer of ammonia and urea and, since mid-2013, manufacturers worldwide have voiced increasing concerns over the continued fall of urea prices due to China's increased output.

($1 = 3.7495 riyals)

(Reporting by Hadeel Al Sayegh) ((Hadeel.AlSayegh@thomsonreuters.com; +971566883310;))

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