August 01, 2024 [Reuters]- Saudi Basic Industries Corp (SABIC) one of the world’s biggest petrochemicals companies, reported a close to 85% jump in second-quarter net profit on Thursday, helped by higher margins and accounting changes.

SABIC reported net profit of 2.18 billion riyals ($581.04 million) for the three months to June 30, beating analyst expectations of 904.25 million riyals, LSEG data showed.

Along with improved margins, SABIC said profit was higher partly due to non-cash benefits resulting from new regulations on the Islamic tax zakat.

SABIC, which is 70% owned by oil giant Aramco, said its long-term focus would remain on “strategic portfolio optimisation” and restructuring underperforming assets.

The sale of steel business Hadeed to the Public Investment Fund was completed on June 1, SABIC said.

SABIC previously said the Hadeed sale had an enterprise value of $3.3 billion. The final sale price will be disclosed at a later date, SABIC has said.

Portfolio optimisation is a priority to drive better returns and reallocate capital to higher-margin opportunities, SABIC said.

Revenue in the quarter rose 5% from a year prior to 35.72 billion riyals. It attributed the increase to better average selling prices and a slight increase in sales volume.

SABIC kept its projection for capital expenditure this year unchanged at $4 billion to $5 billion.

Since Aramco bought a majority of SABIC in 2020 for $69.1 billion, $2.08 billion of “captured value” has been realised, SABIC said. That includes $162 million in synergy in the second quarter.

Aramco, which owns 70% of SABIC, expects $3 billion to $4 billion in annual synergy from the acquisition by next year, the oil giant said in the prospectus for its secondary share sale last month.