SRMED
Englishعربي
Englishعربي
Saudi Advanced Petrochemical Company reported a 58% drop in net profits for the first quarter of 2026, falling to 30 million riyals ($8 million) from 72 million riyals in the same period a year earlier. Despite this decline, the company's sales revenue surged 76% year-over-year to 1,079 million riyals, driven by higher sales volumes following the launch of its new Advanced Polyolefins Industry Company facility in the third quarter of 2025. As reported by Asharq Al-Awsat and confirmed in the company's official Tadawul disclosure, the results highlight the challenges of scaling operations in a volatile petrochemical market.
The profit squeeze came primarily from increased depreciation, fixed costs, and financial charges tied to the new polyolefins plant, which began commercial operations last year. According to the company's filing on the Saudi Exchange, propane prices fell 14% during the quarter, providing some relief, but this was offset by the recognition of these new expenses in the income statement. Revenue growth was fueled by a 94% spike in sales volumes, yet netback prices dipped by about 10%, pressuring margins as detailed in analyses from market reports.
Compared to the prior quarter, net profits showed a dramatic 2,900% increase from just 1 million riyals, thanks to an 11% reduction in financing costs, a 19% drop in selling, general, and administrative expenses, and a one-time gain from disposing of an investment in an associate via a share swap with SK Gas Petrochemical Pte. Ltd. This quarterly rebound occurred even as revenue dipped 8% and prices for propane and propylene rose 11% and 13%, respectively, underscoring short-term operational improvements amid broader headwinds.
The results outperformed analyst expectations, with Bloomberg forecasts anticipating only 13.5 million riyals in net profit, according to Enterprise AM. For investors and stakeholders in Saudi Arabia's petrochemical sector, this performance signals the trade-offs of expansion: robust top-line growth from new capacity, but near-term earnings pressure from startup costs. The company, listed on the Tadawul under ticker 2330, remains a key player in propylene and propane derivatives, and its trajectory will depend on stabilizing prices and optimizing the polyolefins output.
Looking ahead, Advanced Petrochemical's ability to integrate the new facility fully could drive future profitability, especially if global demand for polyolefins strengthens and input costs like propane remain favorable. Market watchers will monitor upcoming quarters for signs of margin recovery, as the sector grapples with fluctuating energy prices and geopolitical influences on oil-linked products. These Q1 figures, released in mid-April, provide a snapshot of resilience in Saudi's push toward diversified industrial growth.