That combination, lower volumes and a cost base that had just been repriced upward, is precisely the environment in which operating leverage works against a producer rather than for it.
The quarterly cadence within the full year is worth examining carefully, because it reveals how much of the apparent annual recovery was structural and how much was transient.
In Q2 2024, net profit reached SAR 2.18 billion compared to SAR 0.25 billion in the previous quarter, driven primarily by higher sales volume and improvement in operating rates following the completion of scheduled turnarounds of certain plants.
That sequential improvement was real, but it was partly mechanical. Plants returning from turnaround always produce a volume uplift in the quarter that follows, and the Q1 baseline was depressed by both the initial feedstock cost shock and the operational disruption of maintenance cycles.
Revenue in Q2 2024 increased by 9 percent quarter-over-quarter to SAR 35.72 billion, primarily attributed to the increase in sales volume, offset by a decrease in average selling prices.
Volume recovered. Prices did not follow.
The second half of the year reversed much of that progress.
In Q4 2024, SABIC widened net losses by 9.4 percent to SAR 1.89 billion from SAR 1.73 billion in Q4 2023, having turned to losses from a net profit of SAR 1 billion in Q3 2024.
That Q3-to-Q4 swing is the most instructive data point in the full-year sequence. It suggests that the mid-year volume recovery was not accompanied by any durable improvement in the underlying spread between feedstock cost and product realization. When the seasonal and operational tailwinds faded, the structural margin compression reasserted itself.
Against that backdrop, the full-year outcome represents a genuine, if fragile, turnaround.
SABIC swung to a net profit of SAR 1.54 billion in 2024, against a net loss of SAR 2.77 billion a year earlier.
The swing from loss to profit is meaningful, but the composition of that swing matters as much as the headline.
Operating income saw an increase of SAR 2.02 billion year-on-year thanks to higher gross profit, while zakat expenses shrank year-on-year by SAR 1.06 billion due to the reversal of the zakat expense provision following updates to the relevant regulations.
A regulatory accounting adjustment contributing over a billion riyals to the bottom-line improvement is not the same as a recovery in chemical spreads. Investors following Saudi chemicals sector quarterly results on Tadawul should separate the two carefully.
The fertilizer subsidiary adds a layer of nuance.
SABIC Agri-Nutrients reported full-year 2024 revenue of SAR 11.1 billion, flat on the prior year, with net income declining 9.1 percent to SAR 3.33 billion and profit margin compressing from 33 percent to 30 percent.
The fertilizer business is 100 percent dependent on methane as its primary feedstock, making it the most directly exposed entity within the SABIC group to the January 2024 price reset.
Urea prices did rise in Q4 2024 due to supply disruptions and stronger demand,
which provided some relief in the final quarter, but it was insufficient to prevent the full-year margin contraction.
The broader structural question for investors watching the petrochemical sector on Tadawul is whether 2024 represents the trough of a cycle or the beginning of a new cost regime.
Further feedstock price increments are expected, with major petrochemical producers anticipating ethane prices eventually settling at either $3.50 per million British thermal units or $1 per million British thermal units below US ethane prices.
That trajectory, if it materializes, means the cost floor for Saudi producers is still moving. The competitive advantage that defined this sector for decades is not disappearing, but it is being recalibrated.
This is the latest in a series of phased price hikes that began in earnest in 2024, reflecting a disciplined approach by the Ministry of Energy to reduce the fiscal burden of energy subsidies while giving industrial players time to adapt.
For investors, the analytical task is to track not just what SABIC earns in any given quarter but what the spread between its feedstock cost and its product realization is doing at the physical level. The quarterly results on Tadawul are the financial expression of a supply chain that runs from Aramco's gas fields through SABIC's crackers to polymer markets in Asia and Europe. When that chain is understood in its physical sequence, the earnings numbers stop being surprises and start being confirmations of what the molecule was already telling you.
This article is for informational and research purposes only. It is not a solicitation. For investment decisions, consult a licensed financial advisor.
