Saudi Basic Industries Corp (SABIC), one of the world’s largest petrochemicals groups, reported a 4.5% drop in second-quarter net profit on Sunday, a much smaller decline than analysts had forecast.

SABIC made a net profit of 6.17 billion riyals ($1.64 billion) in the three months ending June 30, down from 6.46 billion riyals in the year-earlier period, the company said in a bourse statement.

This was above the average forecast of seven analysts polled by Reuters, who had predicted SABIC would make a quarterly profit of 4.96 billion riyals.

SABIC, which is 70% state-owned, blamed the profit fall on lower average sales prices, although it added that sales costs also declined.

The company’s results are closely tied to oil prices and global economic growth because its products – plastics, fertilisers and metals – are used extensively in construction, agriculture, industry and the manufacturing of consumer goods.

Lower oil prices adversely affected SABIC’s earnings in the final quarter of 2014 and the company warned in January that 2015 earnings would be unpredictable, with challenges especially prominent in the early part of the year.

In April, the company said its first quarter net profit dropped 39%, attributing the slide to oil and petrochemical product prices.

Source: Reuters