Riyadh - Mubasher: Saudi International Petrochemical Company (Sipchem) reported net losses of SAR 59 million in the third quarter of 2016 against a net profit of SAR 71.6 million in Q3-15.
The weak performance was attributed to lower average selling prices and sales volume, due to interruptions for 11 days in three plants (Carbon Mono-oxide, Acetic Acid, Ethyl Acetate), according to Al Jazira Capital.
Moreover, higher Zakat provision of SAR 29 million compared to SAR 8 million in Q2-16 and higher than expected production cost after the technical issues of Carbon Monoxide plant in Q3-16.
Sipchem’s sales in Q3-16 stood at SAR 681.5 million, which came below Al Jazira Capital estimates of SAR 856.7 million.
"We believe that in addition to the impact of revenues decline and margins, the company’s bottom line during the quarter was largely impacted due to the higher provision for Zakat," the research firm said.
Al Jazira Capital maintained the "Overweight” recommendation on Sipchem, with price target of SAR 16.20 per share.
The research firm expected a more improved performance in the next quarter due to continued improvement after plant maintenance in Q2-16, the optimistic outlook of methanol price, which is the key catalysts to support the company’s downstream prices.
