RIYADH: Saudi petrochemicals giant SABIC said yesterday its net profits for the second quarter and first half of this year dived due to a sharp decline in product prices. SABIC net profit for the three months to June 30 slid by 68 percent to 2.1 billion riyals ($560 million) from a year earlier, the company said in a statement.

Profit for the first six months of the year plunged 55 percent to 5.5 billion riyals ($1.47 billion), it said. The slide in earnings was blamed on "lower average selling prices," and a drop in profits made by its associates and joint ventures, said the largest listed company on the Saudi bourse.

Revenues from sales in the first half of the year dropped by 14 percent to $19.5 billion, reported SABIC, which is among the world's 10 biggest chemical firms. State-owned energy conglomerate Aramco said in March it was buying the government's 70-percent stake in SABIC for $69.1 billion, in a deal aimed at providing cash to finance the kingdom's ambitious transformation program.

Aramco, the world's most profitable company, is paying most of the price in cash over the next few years but has already raised a $12 billion loan from leading international banks. Saudi Arabia to start next phase of flour mill privatization.

SAGO sale
Meanwhile, Saudi Arabia's state grain buyer SAGO said it will start the next phase of the sale of its flour mills on Wednesday, which will see pre-qualified bidders perform due diligence and present financial offers. The sale is one of the first privatizations the kingdom is planning as part of a wide-reaching overhaul of its economy. It has attracted interest from some of the world's largest agribusiness firms, including Archer Daniels Midland Co and Bunge Ltd.

Still, Saudi Grains Organization (SAGO) in its statement yesterday did not name successful pre-qualified bidders from the first phase of the process last year. Privatization of the flour milling sector is seen as a litmus test for other large state asset sales to follow.

Large grain market players' interest in SAGO's mills comes as Saudi Arabia grows increasingly dependent on grain imports. The kingdom has become a major importer of wheat and barley since abandoning plans in 2008 to become self-sufficient - as farming in the desert was draining scarce water supplies. But grain industry sources have said the lengthy privatization process has since discouraged some potential bidders. - Agencies