SABIC swings to 500 million riyal profit, doubling analyst forecasts

Summary

• SABIC posted a 500 million riyal third-quarter profit, more than double the 238.3 million riyal consensus.
• The chemicals giant had lost 833 million riyals the previous quarter after Hormuz shipping disruptions hit volumes.
• Sales volumes rebounded 30% quarter-on-quarter as SABIC rerouted exports through Red Sea ports.

The latest

SABIC returned to profit in the third quarter of 2026 with net income of 500 million riyals, up 15% year-on-year and more than double the 238.3 million riyal average analyst estimate compiled by Bloomberg. The Saudi chemicals producer credited higher product selling prices and stronger results from joint ventures and affiliates. Its shares rose as much as 2.8% to 44.96 riyals.

Details

• The numbers: Net profit reached 500 million riyals against 434 million riyals a year earlier, and against a loss of 833 million riyals in the second quarter, according to a filing on the Saudi exchange, Tadawul. The result beat consensus by more than two to one.
• Revenue fell: Revenue slipped 3.1% year-on-year to 28.17 billion riyals from 29.08 billion riyals, which the company attributed to lower sales volumes. Higher selling prices and supply-chain flexibility limited the decline, and the figure still beat the 24.8 billion riyal forecast.
• Cash flow swing: Free cash flow turned positive at 5.61 billion riyals, reversing negative flows of 1.4 billion riyals in the second quarter and rising 29% from 4.34 billion riyals a year earlier.
• Volumes rebounded: Sales volumes climbed 30% quarter-on-quarter, led by a 68% jump in agri-nutrients, 24% in chemicals and 23% in polymers, while specialties were flat. SABIC said it cleared logistical obstacles at the Strait of Hormuz by leaning on ports on the kingdom's west coast.
• What drove earnings: Gross profit rose 575 million riyals on higher selling prices, while results from non-integrated joint ventures and affiliates improved by 1.62 billion riyals, driven mainly by the reversal of an earlier impairment on listed European equity holdings after the share price recovered.
• The offsets: SABIC booked a 985 million riyal loss from discontinued operations tied to the completed sale of its engineering thermoplastics business in North America, South America and Europe, reflecting the reclassification of currency translation differences into the income statement.
• Cost pressure: Selling and distribution expenses increased by 916 million riyals on continued supply-chain disruption, while net financial results weakened by 358 million riyals, affected by fair-value measurement of derivative instruments in the comparison period.
• CEO framing: Chief Executive Faisal Al-Faqeer said the company delivered "exceptional resilience" despite regional geopolitical developments, adding that SABIC remains focused on portfolio optimization, transformation and selective growth.
• Capital plans: SABIC expects capital spending of 3 billion to 3.3 billion dollars this year and said it is maintaining disciplined management of investments. It also reaffirmed its transformation program targeting a 3 billion dollar financial impact by 2030.
• The quarter before: Second-quarter revenue fell 17.9% year-on-year to 24.81 billion riyals after volumes dropped 33% from the first quarter, hitting polymers and urea hardest. The company more than doubled east-to-west polymer shipments and worked with Bahri to move a large chemicals cargo to South Asia.

Background

The second-quarter loss followed the war with Iran and the closure of the Strait of Hormuz, which disrupted shipping routes out of the Gulf and forced Saudi exporters to redirect cargoes through alternative corridors.

Between the lines

The profit rests on items that may not repeat. The 1.62 billion riyal swing in affiliate results came largely from reversing a prior writedown on European listed shares, while revenue still fell and distribution costs rose by 916 million riyals. Al-Faqeer has argued the sector's post-pandemic margin recovery lasted only a year, pointing to pressure volume gains alone may not resolve.

What's next

Watch fourth-quarter volumes for whether the 30% rebound holds, the pace of chemicals operating-rate recovery and Asian demand, and whether capital spending lands inside the 3 billion to 3.3 billion dollar guidance range.

Source: Bloomberg, Asharq Bloomberg, Tadawul