Mubasher: Saudi International Petrochemical’s (Sipchem) Q2 profits came below Aljazira Capital estimates despite the inline revenue with forecasts, SAR 42.0 million, according to a recent statement.
Sipchem’s earnings shrank to SAR 26 million ($6.9 million) in Q2-16 from SAR 110 million ($29.36 million) in Q2-15. The Q2-16 profits showed a deviation of 52.3% from Aljazira Capital estimates and 54.3% from the market consensus of SAR 56.9 million.
“Sales in 2Q2016 stood at SAR 879.7 million, broadly in-line with AJC estimates of SAR 887.4 million. We believe that despite the in-line top line with our estimate, the company’s bottom line during the quarter was largely impacted due to the major restructuring of the company and the recording of a maintenance cost,” the statement added.
Gross profits reached SAR 163.6 million, below the estimates of SAR 205.9 million due to higher than expected production costs.
Meanwhile, Sipchem’s gross margin stood at 18.6% in Q2-16, as compared to 25.7% in Q1-16 and 28.5% in Q2-15, which also attributed to the maintenance cost.
“Sipchem is expected to post SAR 286 million in net income (0.78 EPS) for 2016, recording a decline of 0.7%YoY due to the impact of higher feedstock cost, scheduled maintenance and low level in product price, the statement said.
It added “We remain our ‘Overweight’ on the stock with a target price at SAR 16.20/share; indicating a potential upside of 22.2% over current market price of SAR 13.25/share (as of 27th July 2016).”
