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Shares in Saudi Arabia’s Rabigh Refining and Petrochemical Company (Petrorabigh) dropped on Wednesday after the company reported a net loss for the fourth quarter (Q4) of 2018.
The company reported a 105 million Saudi riyals ($28 million) net loss after zakat and tax for Q4 2018, compared to a net profit of 641 million Saudi riyals reported in Q4 2017.
Petrorabigh recorded a net profit of 669 million Saudi riyals for 2018 - a 52.9 percent decline on the 1.42 billion Saudi riyals profit for 2017.
“As far as the reported numbers, they imply losses in 4Q18 which are likely to be driven by inventory write downs at the refinery after crude oil prices crashed,” Yousef Husseini, head of the chemicals team of analysts at EFG Hermes told Zawya by email, adding that “the petchem (petrochemical) division also likely saw weaker earnings on reduced prices”.
Brent oil prices dropped 19.18 percent during the year 2018, data from Eikon shows, while prices have gained more than 22 percent so far in 2019.
Saudi Kayan Petrochemical, one of the biggest listed petrochemicals companies on Tadawul and an affiliate of the Middle East’s biggest petrochemicals producer, Saudi Basic Industries Corporation, also reported a loss in Q4 2018 earnings when it declared its preliminary results late last month. (Read more here).
“In the short term, the refinery (Petrorabigh) is likely to see a better performance in 1Q19 as oil prices have seen some rebound,” EFG Hermes’s Husseini added.
“But the petchem earnings will be under pressure as product prices are quite a bit lower than average 4Q18 levels and their feedstock costs are largely fixed on the petchem side, so the lower prices will eat directly into their margins,” he added.
The company’s shares dropped 0.91 percent on Wednesday, while the Saudi index ended the day 0.59 percent higher. Since the start of 2019, the company’s shares have added 2.2 percent.
According to data from Eikon, one analyst gave a ‘buy’ rating on the company’s stock, and one analyst gave a ‘sell’ rating.
Stock markets in the Gulf mostly rose on Wednesday. Dubai’s index added 2.58 percent, Abu Dhabi’s index gained 0.51 percent, Qatar’s index added 0.96 percent, Kuwait’s premier market index gained 0.37 percent, Bahrain’s index added 0.91 percent and Oman’s index was mainly flat.
(Reporting by Gerard Aoun; Editing by Michael Fahy)
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