Propane disruption hit Advanced net income

Propane squeeze pushes Advanced into the red: Advanced Petrochemical swung to a SAR 98 mn net loss in 2Q from a SAR 82 mn net income a year earlier, it said in a Tadawul filing. Rising feedstock costs, lower production due to propane supply disruptions, and higher operational expenses at the polyolefins plant outweighed stronger selling prices.

Higher selling prices compensate for lower sales volumes: Revenue rose 18.5% y-o-y to SAR 827 mn during the period, driven by a 34% increase in net selling prices, despite a 12% decline in sales volumes.

A similar story in the first half: Advanced posted a SAR 69 mn loss in 1H, reversing a SAR 153 mn net income a year earlier. Rising propane and purchased propylene prices, together with costs associated with the Advanced Polyolefins facility, continued to pressure earnings despite stronger revenue.

A recovery underway? 2Q earnings also absorbed a one-time expense of SAR 20 mn after the company launched maintenance activities earlier than scheduled to make the most of the propane supply disruption. Advanced expects this will improve operating efficiency, adding that propane supplies and production volumes returned to normal in June.