Saudi Basic Industries Corporation, the biggest petrochemicals producer in the Middle East, reported a year-on year and quarter-on-quarter rise in net income as average sale prices and volumes of goods sold improved in the first quarter.
The company reported a net profit of 5.51 billion Saudi riyals (Dh5.39bn) for the three months ending March 31, up 5.4 per cent from 5.23bn riyals for the same period in 2017, Sabic said on Sunday in a statement to Saudi Stock Exchange Tadawul, where its shares are traded. Net income was 49 per cent higher than 3.7bn riyals reported at the end of the fourth quarter of last year, it said.
Profit for the latest quarter came slightly under the 5.55bn riyals mean estimate of analysts polled by Bloomberg whose estimates ranged between 5.10bn to 5.88bn riyals.
“The increase in net income is attributable to higher average selling prices and sold quantities despite the strategic restructuring initiative implemented by Sabic in the first quarter 2018 that aims to increase productivity ... in addition to lowering the cost structure,” the company said in the bourse filing.
The impact on total cost as a result of the restructuring initiative amounted to 1.1bn riyals, the company said.
Sabic’s sales for the period however were in line with analysts' estimates. Total sales at the end of the first quarter climbed to 41.86bn riyals, a 15 per cent year-on-year and 4 per cent quarter-on-quarter rise. Three analysts' estimates for the quarterly sales ranged between 38.50bn riyals to 43.77bn riyals.
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The company, which is 70 per cent owned by the Saudi government, is among the biggest listed firms in the broader Middle East. It produces plastics, fertilisers and metals that are used extensively in construction, agriculture, industry and manufacturing of consumer goods. Sabic has struggled to maintain profitability in the wake of the three-year oil price slump. The company reported a 19 per cent slide in its fourth-quarter 2017 net income, which it attributed to reduced output and fewer products sold during the period.
Sabic has restructured its business in recent years and is looking to develop its speciality chemicals business to diversify revenue streams. Along with Saudi Aramco, the world’s biggest oil exporter, Sabic is a key component of Saudi Arabia’s economic diversification drive as the kingdom seeks greater downstream integration and builds major refining and petchems facilities to cut its dependence on the sale of crude for revenues.
In November, both companies signed an agreement to build one of the world’s largest oil-to-chemicals facilities on the country’s western Red Sea Coast. The partners last week awarded the US engineering firm KBR a project management contract to develop the $20bn scheme.
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RESULTS
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What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
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The candidates
Dr Ayham Ammora, scientist and business executive
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Tony Booth, professor of education
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Dr Mohamed El-Erian, economist
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Dr Mark Mann, scientist
Gina MIller, anti-Brexit campaigner
Lord Smith, former Cabinet minister
Sandi Toksvig, broadcaster
What should do investors do now?
What does the S&P 500's new all-time high mean for the average investor?
Should I be euphoric?
No. It's fine to be pleased about hearty returns on your investments. But it's not a good idea to tie your emotions closely to the ups and downs of the stock market. You'll get tired fast. This market moment comes on the heels of last year's nosedive. And it's not the first or last time the stock market will make a dramatic move.
So what happened?
It's more about what happened last year. Many of the concerns that triggered that plunge towards the end of last have largely been quelled. The US and China are slowly moving toward a trade agreement. The Federal Reserve has indicated it likely will not raise rates at all in 2019 after seven recent increases. And those changes, along with some strong earnings reports and broader healthy economic indicators, have fueled some optimism in stock markets.
"The panic in the fourth quarter was based mostly on fears," says Brent Schutte, chief investment strategist for Northwestern Mutual Wealth Management Company. "The fundamentals have mostly held up, while the fears have gone away and the fears were based mostly on emotion."
Should I buy? Should I sell?
Maybe. It depends on what your long-term investment plan is. The best advice is usually the same no matter the day — determine your financial goals, make a plan to reach them and stick to it.
"I would encourage (investors) not to overreact to highs, just as I would encourage them not to overreact to the lows of December," Mr Schutte says.
All the same, there are some situations in which you should consider taking action. If you think you can't live through another low like last year, the time to get out is now. If the balance of assets in your portfolio is out of whack thanks to the rise of the stock market, make adjustments. And if you need your money in the next five to 10 years, it shouldn't be in stocks anyhow. But for most people, it's also a good time to just leave things be.
Resist the urge to abandon the diversification of your portfolio, Mr Schutte cautions. It may be tempting to shed other investments that aren't performing as well, such as some international stocks, but diversification is designed to help steady your performance over time.
Will the rally last?
No one knows for sure. But David Bailin, chief investment officer at Citi Private Bank, expects the US market could move up 5 per cent to 7 per cent more over the next nine to 12 months, provided the Fed doesn't raise rates and earnings growth exceeds current expectations. We are in a late cycle market, a period when US equities have historically done very well, but volatility also rises, he says.
"This phase can last six months to several years, but it's important clients remain invested and not try to prematurely position for a contraction of the market," Mr Bailin says. "Doing so would risk missing out on important portfolio returns."
