(Bloomberg) --

Saudi Basic Industries Corp., the chemical maker in which Saudi Arabia’s state oil giant holds a majority stake, sees a better second half after posting its biggest quarterly loss in at least a decade.

The coronavirus pandemic has throttled global demand this year, with widespread lockdowns curbing consumption of plastics, cosmetics and other products made with petrochemicals. But there are signs of recovery already in the second half, Yusef Al-Benyan, chief executive officer of the company known as Sabic, said on a conference call.

“We expect the third and fourth quarters to see slight improvements” in demand, Al-Benyan said. “There will be positive results as we have already seen in July and August with the slight demand improvement, in addition to a slight improvement in prices.”

Saudi Arabia, the biggest oil producer in OPEC, has sought to diversify its economy away from crude sales by building new industries. Expanding chemical output to sell higher-value hydrocarbon products is a key part of that strategy. Saudi Aramco this year bought a 70% stake in Sabic as the world’s biggest oil exporter strives to become one of the largest chemical producers too.

Sabic attributed its second-quarter loss of 2.22 billion riyals ($592 million) to falling prices and 1.18 billion riyals of asset writedowns, it said in a statement. The company reported a 2.03 billion-riyal profit a year earlier.

The manufacturer is constantly reviewing the value of its assets, Al-Benyan said, declining to comment on whether the reported impairments would affect the company’s value on Aramco’s books.

Sabic has lost almost a third of its market value since Aramco announced the planned acquisition in July 2018. The chemical maker’s shares dropped 0.6% on Thursday, trading at 87.50 riyals as of 1:05 p.m. in Riyadh.

Saudi Arabia’s finances have been hurt by oil’s 32% slump this year. The country is leading efforts by the Organization of Petroleum Exporting Countries and its allies to cut crude production amid a glut of oil.

Other earnings details:

  • Sabic generated second-quarter sales of 24.62 billion riyals, down 29% from the previous year
  • The operating loss was 1.26 billion riyals, compared with a profit of 4.02 billion riyals a year earlier

(Updates with CEO comments in second and third paragraphs.)

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