Advanced Petrochemicals CEO to Argaam: We expect to maintain profit margins supported by decline in propane prices and shipping costs

Mamdouh Al-Omari, CEO of Advanced Petrochemicals

Mamdouh Al-Omari, CEO of Advanced Petrochemicals, said that the company expects lower propane prices and shipping costs to help maintain profit margins at the same level for the second quarter of this year, despite the difficulty of predicting prices amid current geopolitical conditions.

Al-Omari added in an interview with Argaam that the company noticed a decline in sales prices in late June and early July compared to previous months, noting that propane supplies returned to normal levels as of June and have remained stable so far, expressing hope that they continue at the same levels in the coming period.

Regarding developments in the Strait of Hormuz, he explained that the company was forced to redirect shipping operations from the ports of Dammam and Jubail to the port of Yanbu and Red Sea ports, which led to an increase in shipping costs to about $200 per ton, but the increase in net sales prices helped absorb this increase.

Regarding Copolymers products, he pointed out that the company started producing higher-yield applications as of June, and they are now in the final testing phase and will be part of sales in the second half of 2026, expecting them to contribute to improved profit margins by an average of $40 per ton for the quantities produced from those applications.

He added that the company, through its marketing arm, has started marketing these products in the European market, which is a key market for it, and it is about to sign agreements with distributors in Europe in the coming period.

He confirmed that the Advanced Polyolefins plant reached its design production capacity by the end of December 2025, adding that if profit margins continue at current levels and with the same current production levels, the new plant will exceed breakeven and will contribute to increasing the company's profitability.

Regarding maintenance work, he explained that bringing forward part of the 2027 maintenance resulted in recording a one-time non-cash depreciation expense of about 20 million riyals, but this will contribute to increasing production volumes in the coming period and reducing scheduled maintenance days next year by 50%, stressing that there are no major planned shutdowns during the second half of 2026.

Regarding the second-quarter results, Al-Omari attributed the company's losses to the decline in propane supplies during April and May, along with the continued inclusion in the income statement of depreciation expenses, fixed costs, and financing costs for the new project, noting that the company started recording these expenses as of the second half of 2025.

He added that the decline in propane supplies led to a decrease in production volumes by about 55% compared to the previous quarter, and a 45% decrease in sales, which negatively impacted results, despite a 27% increase in profit margins compared to the previous quarter and 12% compared to the same quarter of 2025.

He pointed out that the company recorded a profit of 20 million riyals from the asset swap deal with SK Gas during the first quarter of 2026, while it started recording its full share of the new plant as of the second quarter of 2026.

According to Argaam data, Advanced Petrochemicals, which produces polypropylene, recorded a loss of 69 million riyals by the end of the first half of 2026, compared to a profit of 153 million riyals achieved during the same period of 2025.

To Argaam

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