SABIC’s Q2 2019 profit misses estimates on lower margins: Riyad Capital

Saudi Basic Industries Corp’s (SABIC) Q2 2019 profit of SAR 2.12 billion missed Riyad Capital and market consensus estimates of SAR 3.28 billion and 3.36 billion, respectively, the research firm said in an earnings report. 

The variation occurred, as “net margins contracted to a low of 6 percent from 9 percent last quarter and 15 percent a year earlier on the back of lower share of results from associates and JVs,” the report said.

The research firm reviewed its expectations toward SABIC’s shares as it expects the firm’s H2 2019 profits to continue the downtrend as a result of lower products selling prices, which will affect profit margins, due to additional global production capacity of basic chemicals.

Riyad Capital maintained its “Neutral” recommendation for the share, and lowered its target price to SAR 115 per share from SAR 124 per share.