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SABIC announces Q1 2011 preliminary results


Saudi Basic Industries Corporations (SABIC) Q1 2011 net income came in at US$2bn, higher than its estimate of US$1.5bn.

The reported figures are the highest quarterly earnings in the company's history. Its Q1 2011 net income grew 34 per cent QoQ primarily benefiting from strong prices, while higher production and improved prices resulted in a 42 per cent YoY growth.

Q1 2011 net income beat the estimate of US$1.5bn:

SABIC's Q1 2011 net income came in at US$2bn compared to its estimate of US$1.5bn. The company believes this can be attributed to higher selling prices. Q1 2011 net income increased 42 per cent YoY on account of increased production and higher prices. Q1 2011 earnings benefited from the full quarter contribution of Yansabs' production. On a QoQ basis, net income increased 34 per cent due to higher prices and increased earnings from its foreign subsidiaries.

Gross profit and operating profit higher than expectations:

SABIC reported a Q1 2011 gross profit of US$4.1bn, 18 per cent higher than its estimate of US$3.4bn. Q1 2011 operating income came in at US$3.3bn, higher than SABIC's estimate of US$2.7bn. The company believes higher than expected selling prices was the key reason behind the deviation. Gross profit was up 26 per cent YoY (19 per cent QoQ), while operating profit increased 29 per cent YoY (25 per cent QoQ).

SABIC remains Overweight on the stock with a price target of US$33.9:

The company remains confident regarding its full year performance in 2011 and strong Q1 2011 results support our optimism towards the stock. SABIC awaits detailed results before it updates the numbers.