Riyadh – Mubahser: Advanced Petrochemical Company’s profits fell 19.7% year-on-year to SAR 188 million in the third quarter of 2016 from SAR 234 million, while, net earnings grew 0.76% quarter-on-quarter, according to Albilad Capital.
Over the nine months, the company’s profits plunged 8.1% to SAR 521 million, down from SAR 567 million in the same period last year. Gross profit (GP) recorded SAR 202 million in Q3-16, losing 18.6% Year-on-Year, due to lower selling prices.
Moreover, GP shed 0.36% quarter-on-quarter driven by the decrease in feedstock prices. Operating income (EBIT) decreased 19.7% Year-on-Year to SAR 193 million in Q3-16, while adding 0.75% quarter-on-quarter.
The average propane price fell 24% in Q3 2016 Year-on-Year and 9% quarter-on-quarter, while polypropylene prices declined 6.5% Year-on-Year and increased 2.2% quarter-on-quarter. Thus, the polypropylene - propane price spread in Q3 2016 stood at $700, which is the reason of the gross margin improvement.
“The third quarter’s net earnings missed our estimate of SAR 218, which were based on projected sales of 150,000 tonnes in Q3-16, where we believe the actual figure of SAR 188 million stemmed from 140,000 tonnes,” the report said
The profits included an impairment charge of SAR 14 million for available for sale investments.
Albilad Capital expected growth in earnings in Q4-16 compared to Q3, due to polypropylene prices stabilization, hiking volume sales and the expansion in polypropylene - propane price spread.
The investment company gave Advanced Petrochemical Company “overweight” recommendation, with a fair value of SAR 46.
“We believe that the company is able to continue pay cash dividends at SAR 2.5 per annum,” the report said.
