Advanced Petrochemical Q3 Profit Slumps on Logistics Disruption

Advanced Petrochemical Co.'s third-quarter net profit fell year on year as sales volumes declined 20% due to geopolitical disruptions to logistics, Chief Executive Officer Mamdouh AlAmri said in an interview with Argaam.

The drop came despite a 12% increase in production. Results were also hit by an 8% rise in propane prices, while depreciation, fixed costs, and financing expenses were recognized for a full three months versus two and a half months a year earlier, AlAmri said.

The company had sold about 50% of its inventory by the end of September, but those volumes were classified as goods in transit for accounting purposes and will be recognized as revenue at the end of the fourth quarter once criteria are met, he added.

To address logistics challenges, Advanced adopted multiple shipping routes, including land transport to neighboring markets such as Turkey and Jordan, domestic sales, and shipments through Dammam Port and Red Sea ports.

Demand remained strong in the third quarter, particularly in India and Pakistan, AlAmri said. Selling prices fell 16% quarter on quarter, but profit margins held steady as propane prices declined 31% over the same period.

AlAmri noted that fourth-quarter price trends remained difficult to predict amid geopolitical uncertainty. The company recorded an increase of about $100 per ton in net selling prices in October, accompanied by a broadly similar rise in propane prices. These developments suggest fourth-quarter profit margins will remain close to levels recorded in the second and third quarters of 2026, he predicted.

The company has returned to normal operating rates following the stabilization of propane supply flows during the third quarter, AlAmri said. Current production levels should support net profit despite continued pressure from financing and depreciation costs, provided profit margins stabilize and logistics conditions improve.

Financing and depreciation costs are normal burdens for large industrial projects, he said, adding that reducing their impact depends on maintaining targeted production levels, which the company achieved in the third quarter, while preserving healthy profit margins.

If September's improvements in logistics and profit margins continue, fourth-quarter production is expected to remain close to third-quarter levels, while sales should increase as carried-over inventory becomes available, AlAmri added.