(Bloomberg) -- Saudi Arabia’s top chemicals maker warned of “considerable uncertainty” for the industry after reporting a surprise full-year loss.

Saudi Basic Industries Corp., also known as Sabic, posted a net loss of 2.77 billion riyals ($739 million) for 2023, missing analyst expectations for a profit. The result underscores the depth of the challenge chemicals companies face as they grapple with a weak market, slower economic growth and a drop in prices.

“The petrochemical industry navigates a challenging operating environment,” Chief Executive Officer Abdulrahman Al-Fageeh said Tuesday. “Underwhelming demand within our target market led to lower year-end product prices.”

The annual loss is the company’s first in data going back to 1996. Sabic attributed the result to discontinued operations after divesting its steel unit, Hadeed, while a lackluster market dragged revenue down. The shares have retreated 4.3% this year following a decline of almost 7% last year.

“Profitability is likely to remain under pressure through the first half amid weak demand and expectations of a prolonged period of lower volume and selling prices,” Salih Yilmaz, an analyst at Bloomberg Intelligence, said in a note.

Riyadh-based Sabic, in which Saudi Aramco owns a majority stake, sees capital spending at as much as $5 billion this year as it develops new technology to turn crude oil into chemicals and works on building a “robust” position in China.

It plans to start building a $6.4 billion petrochemical complex in Fujian province in the first half of the year, funded with debt and cash. Free cash flow fell 45% last year to about 14 billion riyals.

The company’s long-term rating was affirmed by Moody’s at A1 on Monday, with a positive outlook.

“Sabic remains steadfast in pursuing future growth despite short-term market challenges,” Al-Fageeh said in a statement. Yet “there remains considerable uncertainty heading into the first quarter of 2024.”

Aramco, the world’s top oil producer and exporter, is scheduled to publish results March 10.

(Updates with CEO comments starting in third paragraph.)

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