XOM Exxon Mobil Corp

By Ahmed Al Omran

RIYADH--Saudi Basic Industries Corp. (2010.SA), one of the world's biggest petrochemical companies, on Thursday said it has cut costs by 18% in the second quarter as it copes with a fall in earnings due to lower sales prices.

"Global markets are going through difficulties and challenges when it comes to energy prices and its effect on the petrochemicals industry and the economies of different countries," Yousef Abdullah al-Benyan, vice chairman and chief executive, said in a press conference.

The company, better known as Sabic, on Wednesday reported a 23% year-over-year fall in second-quarter net profit as lower product prices continued to weigh on its business.

Sales in the quarter ending June 30 dropped 18% to 34.5 billion riyals ($9.2 billion) from 42.1 billion riyals for the same period last year, Sabic said. It cut costs compared with the previous quarter.

"But in the second quarter, the improvement of oil prices had a positive impact on petrochemicals prices," he said.

"We have an 11% increase in average sales price in the second quarter compared with the first quarter," Mr. al-Benyan said. "We hope oil prices will stabilize in the third quarter as we have seen in the second quarter, and this will reflect positively in the petrochemicals industry," he added.

The company said it maintains a positive outlook for Europe, despite the U.K.'s decision to leave the European Union.

"In Europe, we own our plants 100%. We have no partnerships. There is no impact on Sabic, our sales or business plan," he said.

Sabic employs around 6,000 people in Europe and its business includes a network of sales offices and logistic hubs, as well as three petrochemical production sites in the Netherlands, Germany and the U.K.

As for the U.S., Mr. al-Benyan said the company was "very excited" about a potential project announced Monday for a major new petrochemical complex on the Gulf Coast that would be developed as a joint venture with Exxon Mobil Corp.

"This is in a very strategic market: North America. It is going to be one of the major players in the petrochemicals industry in the future. It's a huge market and a very important market for us," he said.

Mr. al-Benyan said it would be premature to determine the cost of the project at this stage, but added that the company is "confident this project is moving in the right direction."

Write to Ahmed Al Omran at ahmed.alomran@wsj.com

(END) Dow Jones Newswires

July 28, 2016 09:05 ET (13:05 GMT)

Exxon Mobil (NYSE:XOM)
Historical Stock Chart
From Mar 2024 to Apr 2024

Exxon Mobil (NYSE:XOM)
Historical Stock Chart
From Apr 2023 to Apr 2024