Saudi International Petrochemical Co. announces the interim financial results for the period ending on 30-09-2016 (Nine Months)
Wednesday, October 19, 2016
Back to News List
Element Current quarter Similar quarter for previous year % Change current Previous quarter % Change previous
Net profit (loss) -59 71.6 - 26 -
Gross profit (loss) 84 209.4 -59.89 163.6 -48.66
Operational profit (loss) 24 156.9 -84.7 99 -75.76
All figures are in (Millions) Saudi Arabia, Riyals
Element Net profit (loss)
Current period 17.7
Similar period for previous year 262.3
% Change -93.25
Gross profit (loss)
Current period 476.8
Similar period for previous year 730.8
% Change -34.76
Operational profit (loss)
Current period 282.3
Similar period for previous year 561
% Change -49.68
Earning or loss per share, Riyals
Current period 0.05
Similar period for previous year 0.72
% Change -
All figures are in (Millions) Saudi Arabia, Riyals
Element Current period Similar period for previous year % Change
Net profit (loss) 17.7 262.3 -93.25
Gross profit (loss) 476.8 730.8 -34.76
Operational profit (loss) 282.3 561 -49.68
Earning or loss per share, Riyals 0.05 0.72 -
All figures are in (Millions) Saudi Arabia, Riyals
Element Reasons of increase (decrease) for quarter compared with same quarter last year
EXPLAINATION 1. Net Sales declined 15.9% compared to the same quarter last year. The major reason for the decline is the significant drop in sales prices of all companys products, especially the chemicals (liquids) where prices dropped in the range of 23% to 34%. Gross Profit declined 59.9% due to lower sales and due to higher production costs associated with the increase in Gas feedstock, Fuel and energy prices. The impact of the lower Gross Profit was slightly offset by the success of 2016 initiatives that focused on manpower reduction, lower distribution costs, and amended marketing agreements where margin savings are estimated at 20 million Riyals in Q3 2016.
2. G&A expenses increased 31.3% in current quarter due to costs associated with the start of official operation of the new research and development center in Dhahran Techno Valley and the amortization of previous years costs supporting upgrades to SAP modules.
3. Increase in Finance income is due to increase in deposit rates offered by banks on short term deposits and also due to improved treasury management initiatives to take advantage of the higher deposit rates. Increase in financing costs is due to SIBOR rate and interest rate increases. Zakat is higher mainly due to higher Zakat provision in current period.
Reasons of increase (decrease) for period compared with same period last year
EXPLAINATION 1. Net Sales declined 7.2% compared to the previous period ended 30 September 2015. The major reason for the decline in sales is due to decrease in sales prices of all companys products (10% to 36%). Gross Profit declined by 34.8% due to lower sales and due to higher production costs associated with the increase in Gas feedstock, Fuel and energy prices. The impact of the lower Gross Profit was slightly offset by the success of 2016 initiatives that focused on manpower reduction, lower distribution costs, and amended marketing agreements where margin savings are estimated at 56 million Riyals in YTD September 2016.
2. G&A expenses increased 25.6% in current period ended 30 September 2016 due to non-recurring compensation costs for early retirement initiatives, and costs associated with the operation of the new research and development center in Dhahran Techno Valley and costs supporting the amortization of previous years costs supporting upgrades to IT software and current cost for IFRS implementation.
3. Increase in financing costs due to SIBOR rate increases and also due to 1H 2016 bridge loans to support maturing June 2016 Sukuk. Increase in Finance income due to increased bridge loans in 1H 2016 to support the maturing Sukuk and increase in deposit rates offered by banks on short-term deposits, and also due to improved treasury management initiatives to take advantage of the higher deposit rates. Increase in financing costs is due to increased 1H 2016 loans to support the maturing Sukuk and also due to SIBOR and interest rates increases.
4. Loss on disposal of property is up 31 million Riyals due to the write-off of replaced equipment in the methanol plant during the planned turn-around (Sipchem share amount to 20.2 million Riyals) as announced in Q1 2016 results. Zakat is higher mainly due to higher Zakat provision in current period.
Reasons of increase (decrease) for quarter compared with previous quarter
EXPLAINATION 1. Net Sales declined 22.6% compared to the previous quarter. The major reason for the decline is the major drop in sales prices for Acetyls products and also by marginal drop in some product volumes due to lower sales of methanol, BDO, and acetyls products. Decreased production and sales quantities from plant interruptions at Carbon Monoxide, Acetic Acid and Ethyl Acetate plants as announced in TADAWUL on 14 August 2016. Also, deferral of methanol shipment into Q4 2016. Gross Profit declined 48.7% due to lower sales and due to higher production costs associated with the increase in Gas feedstock, Fuel and energy prices.
2. G&A expenses decreased 5.4% during the quarter due to various cost savings made, however these were partially offset by costs associated with the operation of the new research and development center in Dhahran Techno Valley. Zakat is higher mainly due to higher Zakat provision in current period.
Other notes
EXPLAINATION 1. The Gross Sales reaches 0.68 billion Riyals during the current quarter compared to 0.80 billion Riyals for the same quarter of the previous year, with a decrease of 16%. The Gross Sales reaches 2.45 billion Riyals during the current period ended 30 September 2016 compared to 2.64 billion Riyals for the same period of the previous year, with decrease of 7.2%.
2. The Total Shareholders equity (excluding minority interests) reaches 5.79 billion Riyals, during the current period ended 30 September 2016 compared to 5.78 billion Riyals for the same period of the previous year, with an increase of 0.1%
3. Since the commercial operation of International Polymers Company plant and Gulf Advanced Cable Insulation Company plant which started during 2nd quarter of last year, the first quarter of the same period last year did not include the expenses and financial results of these plant started during 2nd quarter of last year, the first quarter of the same period last year did not include the expenses and financial results of these plants.
Element EXPLAINATION
Reasons of increase (decrease) for quarter compared with same quarter last year 1. Net Sales declined 15.9% compared to the same quarter last year. The major reason for the decline is the significant drop in sales prices of all companys products, especially the chemicals (liquids) where prices dropped in the range of 23% to 34%. Gross Profit declined 59.9% due to lower sales and due to higher production costs associated with the increase in Gas feedstock, Fuel and energy prices. The impact of the lower Gross Profit was slightly offset by the success of 2016 initiatives that focused on manpower reduction, lower distribution costs, and amended marketing agreements where margin savings are estimated at 20 million Riyals in Q3 2016.
2. G&A expenses increased 31.3% in current quarter due to costs associated with the start of official operation of the new research and development center in Dhahran Techno Valley and the amortization of previous years costs supporting upgrades to SAP modules.
3. Increase in Finance income is due to increase in deposit rates offered by banks on short term deposits and also due to improved treasury management initiatives to take advantage of the higher deposit rates. Increase in financing costs is due to SIBOR rate and interest rate increases. Zakat is higher mainly due to higher Zakat provision in current period.
Reasons of increase (decrease) for period compared with same period last year 1. Net Sales declined 7.2% compared to the previous period ended 30 September 2015. The major reason for the decline in sales is due to decrease in sales prices of all companys products (10% to 36%). Gross Profit declined by 34.8% due to lower sales and due to higher production costs associated with the increase in Gas feedstock, Fuel and energy prices. The impact of the lower Gross Profit was slightly offset by the success of 2016 initiatives that focused on manpower reduction, lower distribution costs, and amended marketing agreements where margin savings are estimated at 56 million Riyals in YTD September 2016.
2. G&A expenses increased 25.6% in current period ended 30 September 2016 due to non-recurring compensation costs for early retirement initiatives, and costs associated with the operation of the new research and development center in Dhahran Techno Valley and costs supporting the amortization of previous years costs supporting upgrades to IT software and current cost for IFRS implementation.
3. Increase in financing costs due to SIBOR rate increases and also due to 1H 2016 bridge loans to support maturing June 2016 Sukuk. Increase in Finance income due to increased bridge loans in 1H 2016 to support the maturing Sukuk and increase in deposit rates offered by banks on short-term deposits, and also due to improved treasury management initiatives to take advantage of the higher deposit rates. Increase in financing costs is due to increased 1H 2016 loans to support the maturing Sukuk and also due to SIBOR and interest rates increases.
4. Loss on disposal of property is up 31 million Riyals due to the write-off of replaced equipment in the methanol plant during the planned turn-around (Sipchem share amount to 20.2 million Riyals) as announced in Q1 2016 results. Zakat is higher mainly due to higher Zakat provision in current period.
Reasons of increase (decrease) for quarter compared with previous quarter 1. Net Sales declined 22.6% compared to the previous quarter. The major reason for the decline is the major drop in sales prices for Acetyls products and also by marginal drop in some product volumes due to lower sales of methanol, BDO, and acetyls products. Decreased production and sales quantities from plant interruptions at Carbon Monoxide, Acetic Acid and Ethyl Acetate plants as announced in TADAWUL on 14 August 2016. Also, deferral of methanol shipment into Q4 2016. Gross Profit declined 48.7% due to lower sales and due to higher production costs associated with the increase in Gas feedstock, Fuel and energy prices.
2. G&A expenses decreased 5.4% during the quarter due to various cost savings made, however these were partially offset by costs associated with the operation of the new research and development center in Dhahran Techno Valley. Zakat is higher mainly due to higher Zakat provision in current period.
Other notes 1. The Gross Sales reaches 0.68 billion Riyals during the current quarter compared to 0.80 billion Riyals for the same quarter of the previous year, with a decrease of 16%. The Gross Sales reaches 2.45 billion Riyals during the current period ended 30 September 2016 compared to 2.64 billion Riyals for the same period of the previous year, with decrease of 7.2%.
2. The Total Shareholders equity (excluding minority interests) reaches 5.79 billion Riyals, during the current period ended 30 September 2016 compared to 5.78 billion Riyals for the same period of the previous year, with an increase of 0.1%
3. Since the commercial operation of International Polymers Company plant and Gulf Advanced Cable Insulation Company plant which started during 2nd quarter of last year, the first quarter of the same period last year did not include the expenses and financial results of these plant started during 2nd quarter of last year, the first quarter of the same period last year did not include the expenses and financial results of these plants.