Saudi Basic Industries Corporation (SABIC) reported on Sunday a 68.36 percent drop in Q2 2019 earnings.

SABIC, the world's fourth-biggest petrochemicals company, said in its earnings release that the reason behind the year-on-year “decrease in net income is attributable to lower average selling prices and decrease in share of results of associates and joint ventures.”

The Q2 2019 net profit after zakat and tax amounted to 2.12 billion Saudi riyals ($565.28 million), compared to 6.7 billion riyals in Q2 2018.

Pritish Devassy, head of equity research at Al Rajhi Capital told Zawya in an email statement that SABIC reported “weak results.”

Devassy said that following the announced results from other petrochemicals companies in the Kingdom “we were expecting SABIC to report profits below our prior estimate/consensus of SAR3.4bn. However the set of results are even more weaker,” Devassy added.

According to Al Rajhi’s Devassy, Yanbu National Petrochemicals recorded a Q2 2019 earnings miss of 100 million riyals, while Saudi Kayan Petrochemical Company’s earnings missed estimates by around 50 million riyals.

SABIC’s Q2 2019 revenue amounted to 35.87 billion riyals, compared to 43.28 billion riyals in Q2 2018, a 17.12 percent drop.

The company’s shares were trading 1.8 percent lower by 11:33 GST on Sunday, at 109 riyals and have retreated 6.37 percent so far since the start of 2019.

“SABIC has prioritized on dividends and hence that should provide some sort of support to stock price,” Devassy said.

The company had announced in May that its board of directors proposed a cash dividend of 2.2 riyal per share for the first half of 2019.

(Reporting by Gerard Aoun; Editing by Mily Chakrabarty)

(gerard.aoun@refinitiv.com)

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