SABIC said it expects higher sales and profitability this year and throughout 2012 as petrochemical prices return to pre-crisis levels and further output capacity is added.

The world's biggest petrochemicals firm by market value, a yardstick for Dow Chemical and Germany's BASF, gave the upbeat outlook after broadly meeting analysts forecasts with a 27% increase of net profit.

SABIC shares fell 3.2% - the biggest drop in five months - as some investors cashed in a 28-month high but market players said the stock could rebound on the next trading session on Saturday.

"2010 is the beginning of the growth and we will see growth continuing in 2011-2012," Chief Executive Mohamed al-Mady told reporters at the company's headquarters, declining to give a growth figure for profit or sales.

"We expect petrochemicals prices to go up and return to their normal levels before the crisis," Mady said.

In the last three months SABIC made 5.81 billion riyals ($1.55 billion) net profit which was below the previous quarter of between 6.4 billion and 7.5 billion riyals before the global crisis began to take its toll in 2008.

Sales for the fourth-quarter rose to 41 billion riyals after 31.9 billion riyals a year ago, Mady said.

SABIC usually does better in terms of profitability than rivals because it pays a government subsidized 75 cents per million BTU (British Thermal Unit) for gas feedstock, a fraction of the cost on international markets.

Mady said there is no indication this feedstock price policy would change after the kingdom's Oil Minister Ali al-Naimi said last year the top OPEC producer was considering raising the price of gas to cover production costs.

"We don't have any indication, the feedstock is now fixed until the second round of review. We have not been really informed of any change," Mady said.

New Capacity
SABIC said production rose in 2010 by 12% to 65 million tons of petrochemicals last year and the output will further increase as new units will go online.

Operations at a new steel plant, with a capacity close to 1 million tons per year will begin by the end of the year.

SABIC's affiliate Saudi Kayan Petrochemicals would start commercial production in the second half of the year, Mady said, adding that output at its Saudi-based affiliates Yansab  and Sharq and its Tianjin joint-venture with Sinopec  would also rise.

He also told Reuters that an expansion of its affiliate Arabian Industrial Fibers Co (Ibn Rushd) would be completed within two and a half years.

SABIC has not yet decided whether to build synthetic rubber plants at Yanpet and Kemya, two Saudi-based joint-ventures with and U.S. ExxonMobil Chemical.

SABIC stock fell 3.2% as investors booked profits after a 28-month high after but the stock would rebound on Saturday, said Hisham Tuffaha, head of research at Bakheet Investment Group in Riyadh.

"The market over-reacted. I don't think it will drop further," he said.