Efficiency gains helped, but the sector is not out of the woods

The improvement was driven by a mix of better operating performance, stronger contributions from associates and joint ventures, and lower charges linked to discontinued operations and asset impairments, Asharq Al-Awsat reported. Even so, the sector still faced pressure from weaker equity investments, higher average input costs for some producers and lower sales volumes after supply-chain disruptions.

The split between winners and laggards remained sharp. Four companies moved into profit territory in the first half: SABIC Agri-Nutrients, Yansab, Saudi Industrial Investment Group and Alujain. On the other side, Advanced Petrochemical, Sipchem, SABIC, Tasnee and Saudi Kayan continued to post losses.

SABIC Agri-Nutrients remained the sector’s top profit maker, with first-half net profit of about SAR 1.6 billion. That was still 21.4 per cent lower than the SAR 2.04 billion it earned a year earlier, as the company cited lower sales volumes tied to supply-chain challenges and softer results from an associate and a joint venture. Higher average selling prices for most products partly cushioned the decline, according to the company’s explanation as reported by Asharq Al-Awsat.

Yansab delivered one of the strongest year-on-year rebounds. Its profit climbed 363 per cent to SAR 270 million from SAR 58.2 million, helped by firmer selling prices and stronger plant reliability. Saudi Industrial Investment Group also posted a sharp recovery, with profit rising 410 per cent to SAR 194 million.

Losses still concentrated in the biggest names

The biggest red ink remained with Saudi Kayan, which recorded a loss of SAR 1.29 billion, marginally worse than the SAR 1.27 billion loss it posted in the comparable period last year. Tasnee reported a loss of SAR 889.1 million, while SABIC’s first-half loss stood at SAR 820 million.

The second quarter offered a similar but slightly more encouraging picture. Combined losses for the nine companies dropped 42.17 per cent to SAR 2.07 billion from SAR 3.58 billion a year earlier, suggesting that the first-half improvement was not just a one-off accounting effect. Still, the scale of the losses shows how exposed the sector remains to swings in feedstock costs, product mix and export demand.

G. World CEO Mohamed Hamdy Omar told Asharq Al-Awsat that performance across the group differed significantly depending on product mix, petrochemical feedstock costs, output and sales volumes, operating efficiency and exposure to global market shifts and supply-chain disruption. His assessment points to a sector that is improving in patches rather than moving in lockstep.

SABIC’s smaller loss tells only part of the story

One of the clearest examples of the sector’s mixed recovery is SABIC. Its loss narrowed sharply from SAR 4.07 billion to SAR 833 million, a dramatic improvement on paper. But Omar cautioned that much of that swing reflected the absence of earlier provisions and impairment charges rather than a full recovery in underlying operations, according to Asharq Al-Awsat.

That distinction matters for investors. A smaller reported loss can indicate better resilience, but it does not automatically mean margins have normalised or cash generation has strengthened. For capital-intensive businesses such as petrochemicals, the quality of earnings is often more important than the headline number.

SABIC Agri-Nutrients also remained among the better performers in the sector, though its second-quarter profit fell 64.2 per cent to SAR 379 million. The company pointed to lower sales volumes, supply-chain disruptions and weaker contributions from an associate and a joint venture, even as it remained profitable.

What the numbers say about the second half

Omar expects the recovery to continue, but not in a straight line. He said the second half is likely to be gradual and uneven, with global demand, feedstock and energy costs, excess capacity, shipping disruptions and geopolitical tensions still shaping the outlook.

For the sector, that means the next phase will depend less on accounting gains and more on operational proof. Sustainable improvement in margins, sales volumes and cash flow would be the clearest sign that the industry is moving beyond a temporary rebound, he said, as quoted by Asharq Al-Awsat.

That caution is especially relevant for Saudi petrochemicals because the industry sits at the intersection of domestic industrial policy and global commodity cycles. When prices strengthen, producers can recover quickly. When demand softens or logistics are disrupted, losses can widen just as fast.

For now, the first-half numbers suggest the worst may have passed for some players, but not for the sector as a whole. Investors will be watching whether the companies that turned profitable can hold their gains, and whether the larger loss-makers can convert lower impairment charges into genuine operating improvement in the months ahead.