The CEO of Saudi Advanced Petrochemical Company, Mamdouh Al-Omari, expects the company to achieve additional return from the production of copolymer at its new plant, as the company seeks to enhance its profit margins after posting a quarterly loss in the second quarter of this year due to rising costs.

The first loss recorded by the company after five consecutive quarters of profit in Q2 was mainly due to a 40% and 21% increase in feedstock prices (propane and propylene), respectively.

However, Al-Omari told Al-Eqtisadiah that the company treats risks related to feedstock and product prices and global demand as interconnected elements, relying on the spread between product selling prices and propane price as a key risk management indicator.

He said the company is implementing an internal strategy to improve profit margins, based on rationalizing expenses, controlling operational costs, and raising operational efficiency, in addition to maximizing product value by expanding production of higher-yield products, which supports entering new markets and enhances profit margins.

Read also: Advanced's first loss in 6 quarters, stock bucks trend and rises

CEO of Saudi Advanced Petrochemical Company Mamdouh Al-Omari

Mamdouh

The company recently expanded its product basket by starting production of copolymer at the new plant, a product with high demand in higher-yield markets.

According to Al-Omari, this plant allows the company to enter new markets and achieve an additional return ranging between $40 and $60 per ton.

The subsidiary company's poly plant began positively contributing to Advanced's results from the second half of last year, after the project raised annual production capacity from 600,000 tons to 1.4 million tons.

The plant reached its full production capacity by the end of last December, according to Al-Omari.

Read also: Advanced to Al-Eqtisadiah: We are evaluating our investment in SK Advanced

Advanced Petrochemical Company posted losses in Q2

Advanced Petrochemical Company's Q2 results

Propane pressures production and profitability

The CEO of Advanced explained that production volumes in the current quarter were affected by a 55% decline compared to the previous quarter, due to reduced propane supplies during April and May 2026.

However, he expected the new plant to enhance the company's profitability in the coming periods "if profit margins continue at their current levels with stable production levels."

At the same time, he considered it difficult to predict price trends in the third quarter amid ongoing geopolitical tensions.

Price decline may not affect profit margins

According to Al-Omari, the company observed a decline in selling prices during late June and early July compared to previous months.

However, he said that a decline in product prices does not necessarily negatively affect profit margins if accompanied by a drop in propane prices.

The company announced in a statement on Tadawul that net sales prices rose by 34% in the second quarter of the year.

Although the rise in selling prices was offset by a 12% decline in sales volumes due to lower production resulting from reduced propane supplies, the company recorded an increase in Q2 revenues.

Propane decline will boost profit margins

The 6% increase in average selling prices coincided with a rise in costs due to geopolitical conditions in the region, according to Al-Omari.

But the CEO of Advanced stated that the company's focus is on maintaining profitable margins, while continuing to develop higher-profit products and expand the customer base.

Al-Omari expected that the decline in propane prices and shipping costs would help maintain profit margins at the levels of the second quarter of this year.