RIYADH, April 10 (Reuters) - Saudi Arabian Fertilizers Co (Safco) beat first-quarter earnings forecasts, posting its highest quarterly net profit since the start of the global slowdown, helped by higher ammonia and urea prices.
Shares in Safco rose by up to 6.1 percent after the company unveiled a better-than-expected 33 percent rise in its net profit for the quarter to 698 million riyals ($186.1 million), against 525 million riyals in the year-earlier period.
The median forecast of seven banks surveyed by Reuters was for a net profit of 592.9 million riyals.
It was Safco's highest quarterly net profit since the third quarter of 2008, when Safco and global chemical giant Saudi Basic Industries Corp (SABIC), which owns 42.9 percent of Safco, first felt repercussions from the global financial crisis.
Safco said in a statement on the bourse website that prices during the first quarter improved compared to the year-earlier period but sales volumes were up compared only to the fourth quarter.
'These numbers are very good although prices did not rise by that much. For instance, prices of urea -- Safco's main product -- rose by between 2 and 3 percent,' said Hesham Abu Jamea, head of asset management at Bakheet Investment Group.
Safco gave no details on the value or volume of sales for the first quarter. The company had reported a 335 million riyal net profit for the fourth quarter of 2009.
'Sales volumes were bound to be higher than their level in the fourth quarter which witnessed a full-month stoppage for maintenance. They must have come back to normal production levels during the first quarter,' Abu-Jamea said.
Earnings per share rose to 2.80 riyals in the first quarter, from 2.10 riyals a year earlier, Safco said. Operating profit for the period rose 41.4 percent to 618 million riyals.
'Safco makes gains from investment in affiliates such as Ibn al-Baitar fertilizers firm. That is why operating profit is lower than net profit,' said Abu Jamea.
Shares in Safco on Saturday added almost three times first-quarter earnings per share to 144.50 riyals.
The stock had risen 12.6 percent this year, which is above both the all-share index and the petrochemical stocks index but below a 20 percent gain clocked by parent company SABIC.
'We expect the stock to rebound today from its recent weakness. We maintain our 'underweight' rating on valuation concerns with a price target of 128 riyals,' NCB Capital said in a note commenting the results.
(Reporting by Souhail Karam and Ulf Laessing; Editing by Firouz Sedarat and Susan Fenton) ($1=3.750 Saudi riyals) Keywords: SAFCO EARNINGS (souhail.karam@thomsonreuters.com, +966 1 463 2603; Reuters Messaging: souhail.karam.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Shares in Safco rose by up to 6.1 percent after the company unveiled a better-than-expected 33 percent rise in its net profit for the quarter to 698 million riyals ($186.1 million), against 525 million riyals in the year-earlier period.
The median forecast of seven banks surveyed by Reuters was for a net profit of 592.9 million riyals.
It was Safco's highest quarterly net profit since the third quarter of 2008, when Safco and global chemical giant Saudi Basic Industries Corp (SABIC), which owns 42.9 percent of Safco, first felt repercussions from the global financial crisis.
Safco said in a statement on the bourse website that prices during the first quarter improved compared to the year-earlier period but sales volumes were up compared only to the fourth quarter.
'These numbers are very good although prices did not rise by that much. For instance, prices of urea -- Safco's main product -- rose by between 2 and 3 percent,' said Hesham Abu Jamea, head of asset management at Bakheet Investment Group.
Safco gave no details on the value or volume of sales for the first quarter. The company had reported a 335 million riyal net profit for the fourth quarter of 2009.
'Sales volumes were bound to be higher than their level in the fourth quarter which witnessed a full-month stoppage for maintenance. They must have come back to normal production levels during the first quarter,' Abu-Jamea said.
Earnings per share rose to 2.80 riyals in the first quarter, from 2.10 riyals a year earlier, Safco said. Operating profit for the period rose 41.4 percent to 618 million riyals.
'Safco makes gains from investment in affiliates such as Ibn al-Baitar fertilizers firm. That is why operating profit is lower than net profit,' said Abu Jamea.
Shares in Safco on Saturday added almost three times first-quarter earnings per share to 144.50 riyals.
The stock had risen 12.6 percent this year, which is above both the all-share index and the petrochemical stocks index but below a 20 percent gain clocked by parent company SABIC.
'We expect the stock to rebound today from its recent weakness. We maintain our 'underweight' rating on valuation concerns with a price target of 128 riyals,' NCB Capital said in a note commenting the results.
(Reporting by Souhail Karam and Ulf Laessing; Editing by Firouz Sedarat and Susan Fenton) ($1=3.750 Saudi riyals) Keywords: SAFCO EARNINGS (souhail.karam@thomsonreuters.com, +966 1 463 2603; Reuters Messaging: souhail.karam.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.