BCI faces ‘slight’ Q1 2025 price pressures, plans to offset impact: CEO

Ala’ Al-Shaikh, CEO of Basic Chemical Industries Co. (BCI)

Basic Chemical Industries Co. (BCI) is expected to face “slight” price pressures in the first quarter of 2025, CEO Ala’ Al-Shaikh said.

The company is working on expanding into new markets and increasing export capacity for certain products in the first half of 2025 to mitigate the impact on profitability, he told Argaam.

Al-Shaikh stated that Q4 2024 saw a notable revenue improvement of approximately SAR 5 million year-on-year (YoY), contributing to a 5% increase in profit margin.

He said financing costs decreased by SAR 3.35 million after replacing a commercial loan with a grant from the Saudi Industrial Development Fund (SIDF). However, general and administrative expenses rose by SAR 1.1 million.

Regarding segment performance, Al-Shaikh explained that the polyurethane segment’s revenues declined by SAR 5.1 million due to an 11% drop year-on-year (YoY) in sales volumes. Meanwhile, adhesive segment sales increased by 4%, despite a 3% decline in average selling price, resulting in an overall sales increase of SAR 650,000.

Net profit decreased by approximately SAR 8 million, compared to Q4 2023, primarily due to a 5-6% rise in raw material costs in the adhesives and polyurethane segments.

The revenues increase was driven by a 16% rise in sales volumes, along with a 6% increase in average selling prices in the basic chemicals segment. Additionally, revenues in the industrial chemicals segment grew by 20% due to improved pricing, despite a 12% decline in polyurethane sales, the CEO said.

On the impact of rising diesel prices, Al-Shaikh noted that the increase, which took effect in early 2025, will raise operating costs, including raw material expenses, fuel consumption, and distribution costs.

To address this, BCI developed a plan to adjust sales and delivery prices, while exploring alternative strategies to reduce distribution costs.

Speaking on the expansion of Jubail plant, the CEO stated that work has already begun, with completion and production expected within 20 months. This expansion will boost the plant’s production capacity by 40%.

He also emphasized that replacing the long-term commercial loan with a grant from SIDF helped reduce financing costs by approximately SAR 14 million YoY in 2024, strengthening BCI’s expansion capabilities.

Al-Shaikh said that the company’s low debt-to-asset ratio supports its ability to fund future projects, including the Jubail plant expansion.